Venture Advisory Monthly Wrap - September 2017

Key Takeaways

Webjet completed the acquisition of JacTravel from Vitruvian Partners for GBP190m

Wisetech announced the acquisitions of two leading global rate management solution providers Cargoguide and CargoSphere based in the Netherlands and the U.S., respectively

Softbank’s Vision Fund, the world’s largest private equity fund, has invested $1bn in Fanatics. Fanatics is a Florida-based online sports firm that handles the merchandise sales of all major U.S. based professional sports leagues

Deliveroo, the UK-based food delivery startup that brings high - end restaurant food to homes, has raised US$385m in a new funding round led by US firms T. Rowe Price and Fidelity

Fairfax announced its shareholders will vote on the proposed separation of Domain Holdings into a standalone ASX listed entity

Superloop continued its push into fixed wireless with the acquisition of Adelaide based NuSkope

In September 2017, the Australian information technology sector [AXIJ] was slightly down 0.6% while the telco sector [AXTJ] experienced a decline of 4.7%. Both the All Ordinaries [AORD] and ASX 200 [AXJO] were down 0.5% and 0.6%, respectively

Telco and ICT Monthly WrapTelco and ICT Best and Worst Monthly performers

After issuing a statement disavowing a rumoured sale process, communications and IT service provider Speedcast International saw its share price close up 9% for the month. TPG Telecom saw its share price trade down 11% after the company lifted profits but warned of margin pressures as fixed line customers switch to NBN

The 5 best and worst performers for the month of September 2017 were as follows:

Key Company Announcements

Macquarie Telecom Group (4 Sep 17) entered into a 3-year agreement with Covata for the Macquarie Government division to continue to resell Covata’s SafeShare secure collaboration solution to government users. The company currently offers Covata’s Safe Share product either as a dedicated or shared hosted service under its SIGBOX brand to 23 government departments

Spark New Zealand (6 Sep 17) has expanded its 4.5G service to Cromwell, in the Otago region. The launch of 4.5G in Cromwell follows other single-tower deployments covering limited areas in the Christchurch CBD, along with the activation of a cluster of five towers in Queenstown, making a total of 10 sites

Macquarie Telecom Group (7 Sep 17) launched software-defined wide area networking service, in partnership with US SD-WAN specialist Velocloud. The new offering promises multi-path and multi-carrier routing in software over the top of existing network infrastructure, with 'dynamic packet routing' enabling data and network functions to be carried over a mix of links ranging from NBN or private fixed connections to 4G or microwave

Superloop (11 Sep 17) acquired NuSkope and its associated entities RA-WIFI and RA-ADSL to expand its fixed wireless capability. The acquisition accelerates the company's ability to significantly expand fixed wireless coverage in Adelaide and surrounding areas which neatly compliments BigAir wireless network footprint

Melbourne IT (13 Sep 17) announced appointment of Fraser Bearsley as Melbourne IT CFO, following the resignation of Stuart Bland. Fraser has varied background including transaction advisory work and a strong pedigree in accounting and finance gained at Ernst & Young

TPG Telecom (19 Sep 17) reported FY17 revenue of A$2,490.7m (up 4% YoY), EBITDA of A$890.8m (up 5% YoY) and A$413.8m (up 9% YoY). The results include A$35.3m post-tax profit realised on the sale of equity investments and A$4.9m post-tax non-recurring revenue earned by the Group’s Consumer Segment. The company also declared a final dividend of A$0.02 per share

Superloop (21 Sep 17) completed a fully underwritten placement of 8.9m new fully paid ordinary shares to raise A$20m of additional capital. The Placement was offered to institutional and sophisticated investors at A$2.25 per share. The funds raised from the placement will be used to provide funding support for further customer-led network expansion, possible strategic acquisitions and balance sheet flexibility for future strategic growth opportunities

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading telco and ICT stocks at the end of the month is as follows:

Telecom stocks were trading on an average forward EV / EBITDA of 9.3x and a median forward EV / EBITDA of 7.5x

Media Monthly WrapMedia Best and Worst monthly performers

Out-of-Home advertisers APN Outdoor Group and oOh!media both traded up throughout September up 12% and 5%, respectively.

Following the passage of media ownership reforms Southern Cross Media saw its share price fall 9% for the month

The 5 best and worst performers for the month of September 2017 were as follows:

Key Company Announcements

Village Roadshow (7 Sep 17) announced that its Theme Parks division is proposing the sale and long term leaseback of 154 hectares of iconic freehold land on the Gold Coast. The proceeds of the sale will initially be used to reduce the company's debt levels and progress towards its growth strategies

APN Outdoor Group (7 Sep 17) finalised a new A$200m Syndicated Finance Facility. The facility is being provided by Commonwealth Bank of Australia, Westpac Banking Corporation and Bank of China and comprises a A$125m three-year tranche and a A$75m five-year tranche

Nine Entertainment (15 Sep 17) completed the sale of Willoughby, Sydney site to Euro Properties, a Hong Kong based property investor for A$134m on an after-tax basis

Fairfax Media (21 Sep 17) announced a trading results for FY18 YTD ahead of the potential lodgement of the Domain Separation Scheme Booklet: FY18 YTD overall group revenues are down 4-5% as compared to last year, across with Metro Media (down 11%), Australian Community Media (down 10%), Macquarie Media (down 4%) partially offset by Domain digital revenue (up 22%). For FY18, Domain’s costs are expected to increase approximately 13% from FY17’s $206m

Fairfax Media (22 Sep 17) subsidiary Domain Group is preparing to demerge its online property subsidiary (Domain Group) in a partial stock market listing. The company received court approval by an Australian court to hold a shareholder meeting to vote on the separation and listing of Domain Holdings

Seven West Media (22 Sep 17) and Prime Media Group disclosed they held takeover discussion which ended without a deal, a faltering start to likely media consolidation brought on by deregulation

oOh!media (22 Sep 17) announced the following appointments to support growth strategy: Tony Faure to replace Michael Anderson as Chairman of oOh!media, Joanne Crewes joins Board as an independent non-executive Director, Debbie Goodin appointed as Lead Independent Director, Michael Anderson remains on Board as an independent non-executive Director

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading media stocks at the end of the month is as follows:

Media stocks were trading on an average forward EV / EBITDA of 9.3x and a median forward EV / EBITDA of 7.5x

Technology Monthly WrapTechnology Best and Worst monthly performers

Following the merger between Afterpay and Touchcorp, the newly formed Afterpay Touch’s share price has continued to perform well and traded up 14% in September following the announcement of several high-profile partnerships

The 5 best and worst performers for the month of September 2017 were as follows:

Key company announcements

Webjet (1 Sep 17) completed acquisition of JacTravel from a fund of Vitruvian Partners LLP and management for GBP190m

Mobile Embrace (7 Sep 17) launched AddGlu, a predictive customer acquisition platform for digital performance marketing. The highly scalable proprietary technology platform uses predictive analytics to present consumers with product and service offerings of the greatest personal value to them. The company expects AddGlu to be a key organic revenue driver for the company

Wisetech Global(12 Sep 17) announced acquisition of two leading global rate management solution providers: Cargoguide, Netherlands-based, leading provider of global air freight rate management solutions for A$6.9m and CargoSphere, US-based, leading provider of global ocean freight rate management solutions for A$11.5m. These transactions are in line with the company's stated strategy of accelerating long-term organic growth through small, targeted, valuable acquisitions across new geographies and adjacencies

Afterpay Touch Group (13 Sep 17) partnered with Jetstar to offer the Afterpay services to its customers. Afterpay will be available on Jetstar.com initially for domestic flights. The partnership marks Afterpay's first buy now, pay later venture in the travel industry

Integrated Research (19 Sep 17) signed an agreement with Cisco to join its SolutionsPlus Program, that will enable a streamlined ordering process for IR Prognosis solutions through the Cisco Global Price List (GPL) and provide sales compensation for the Cisco channel partners and sales teams

ASG Group Ltd (22 Sep 17) acquired SMS Management & Technology for A$120m through a scheme implementation agreement of A$1.698 per share and A$0.102 special dividend. The transaction had EV/ LTM revenue of 0.4x, EV/LTM EBITDA of 14.4x and EV/LTM EBIT of 17.4x

IRESS (25 Sep 17) invested A$2m as a performance-linked investment in Lucsan, a Australian-owned RegTech and data analytics company. The transaction is expected to accelerate the application of RegTech in the financial services landscape

OFX (28 Sep 17) announced appointment of Mike Kennedy to the company's Global Executive Team as President, North America. Mike will be responsible for overseeing OFX’s North American operations and accelerating the delivery of OFX’s North America growth strategy

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading technology stocks at the end of the month is as follows:

Technology stocks were trading on an average forward EV / EBITDA of 13.7x and a median forward EV / EBITDA of 11.8x

Reference stocks

Our reference portfolio is as follows:

Telecom Stocks:

amaysim Australia Ltd. (AYS-AU), Bulletproof Group Limited (BPF-AU), Chorus Limited (CNU-NZ), Inabox Group Ltd. (IAB-AU), Macquarie Telecom Group Limited (MAQ-AU), MNF Group Limited (MNF-AU), Nextdc Limited (NXT-AU), SpeedCast International Ltd (SDA-AU), Superloop Ltd. (SLC-AU), Spark New Zealand Limited (SPK-NZ), Telstra Corporation Limited (TLS-AU), TPG Telecom Limited (TPM-AU), Vocus Group Limited (VOC-AU), Singapore Telecommunications Limited (Z74-SG)

Media Stocks:

APN Outdoor Group Ltd. (APO-AU), Carsales.Com Limited (CAR-AU), Domain Holdings Australia Ltd. (DHG-AU), Asia Pacific Digital Limited (DIG-AU), Event Hospitality & Entertainment Ltd. (EVT-AU), Fairfax Media Limited (FXJ-AU), HT&E Ltd (HT1-AU), iCar Asia Ltd. (ICQ-AU), Macquarie Media Limited (MRN-AU), Nine Entertainment Co. Holdings Pty Ltd. (NEC-AU), News Corporation Shs B Chess Depository Interests repr 1 Sh (NWS-AU), oOh media Ltd (OML-AU), Pacific Star Network Limited (PNW-AU), Prime Media Group Limited (PRT-AU), REA Group Ltd (REA-AU), Seek Limited (SEK-AU), SKY Network Television Limited (SKT-AU), Seven West Media Limited (SWM-AU), Southern Cross Media Group Limited (SXL-AU), Trade Me Group Limited (TME-NZ), Village Roadshow Limited (VRL-AU), WPP AUNZ Limited (WPP-AU)

Tech Stocks:

3P Learning Ltd. (3PL-AU), Aconex Ltd (ACX-AU), Altiumc (ALU-AU), Afterpay Touch Group Ltd. (APT-AU), Appen Ltd. (APX-AU), Big Un Limited (BIG-AU), Bravura Solutions Limited (BVS-AU), Catapult Group International Ltd. (CAT-AU), Citadel Group Ltd. (CGL-AU), Class Ltd. (CL1-AU), Crowd Mobile Limited (CM8-AU), Computershare Limited (CPU-AU), Data#3 Limited. (DTL-AU), DWS Limited (DWS-AU), ELMO Software Ltd. (ELO-AU), GetSwift Ltd. (GSW-AU), Gentrack Group Ltd (GTK-NZ), Hansen Technologies Limited (HSN-AU), Infomedia Ltd (IFM-AU), IRESS Limited (IRE-AU), Integrated Research Limited (IRI-AU), iSentia Group Limited (ISD-AU), Kogan.com Ltd. (KGN-AU), Link Administration Holdings Ltd. (LNK-AU), Impelus Ltd (MBE-AU), Melbourne IT Ltd (MLB-AU), Megaport Ltd. (MP1-AU), MYOB Group Ltd. (MYO-AU), Nearmap Ltd. (NEA-AU), Netwealth Group Ltd. (NWL-AU), Nextdc Limited (NXT-AU), OFX Group Ltd. (OFX-AU), Pro Medicus Limited (PME-AU), Pushpay Holdings Ltd (PPH-NZ), Reckon Limited (RKN-AU), Technology One Limited (TNE-AU), Webjet Limited (WEB-AU), Wisetech Global Ltd. (WTC-AU), Xero Limited (XRO-NZ), Zip Co Ltd. (ZML-AU)

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