Bain-owned MYOB raises $652m in Australia IPO

The company sold 228.3 million shares - of which 226.1 million were new shares - at A$3.65 apiece. This gives MYOB an implied enterprise value of A$2.59 billion. The initial plan was to sell up to 277.2 million shares priced at A$3.00-4.00 apiece.

Bain, which acquired MYOB from Archer Capital and HarbourVest Partners in 2011 for around A$1.3 billion, retains a 56.75% stake. It did not sell any shares in the offering, although it has already taken money out of the business.

"Bain Capital prides itself on building great businesses such as MYOB, possessing a well-known brand with innovative products and leading market share, led by an experienced management team in an exciting and dynamic industry. As a director, I am eager to continue supporting the growth of this iconic, Australasian, cloud-driven technology business with our new shareholders," Craig Boyce, managing director at Bain, said in a statement.

The proceeds of the offering, plus A$437 million in new banking facilities, will be used to take out all existing liabilities. These include A$127.2 million in redeemable preference shares held by Bain and A$6.9 million held by company management; approximately A$68 million due to retail note holders that opted to be redeemed in cash rather than shares; and a vendor note - provided by Archer and HarbourVest - worth A$292.5 million, including break fees.

Bain's acquisition was supported by A$530 million in senior debt plus the vendor note, which had a book value of A$227.7 million as of December 2014. Of the A$155 million in retail notes issued in December 2013, A$53.8 million was used to pay down debt used to finance the deal and the remainder was returned to the private equity firm. In September 2014, MYOB secured A$640 million from lenders to refinance its debt and make a further distribution to Bain.

As of December 2014, the company was carrying senior debt of A$619.5 million, up from A$474 million a year earlier.

MYOB provides business management software solutions to more than 1.2 million small and medium-sized enterprises (SMEs) and 6,400 larger companies in Australia and New Zealand. Australia accounts for 83% of its revenue. The company claims to be the market leader in each country for accounting software and practice software, with a 60-65% share. It also provides enterprise software solutions.

There are approximately 2.5 million SMEs in Australia and New Zealand. MYOB expects its business to be driven by a rise in this absolute number as well as increasing penetration of accounting software - including cloud-based solutions - and the cross-selling of different products to customers.

The company reported a pro forma net profit of A$70.1 million for the 2014 financial year, up from A$64.8 million in 2013. Revenue rose from A$275.5 million to A$299.3 million over the same period. It expects net profit and revenue of A$84.8 million and A$323 million in 2015.

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• Topics
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