The retail offer for measuring technology company ikeGPS’s stock exchange listening opens next week, the third tech float to get off the ground in recent weeks. But profitability is two years away, and the company will be well aware that the share price of travel booking software company Serko’s slumped 14 percent in its first day of trading on Tuesday – reflecting possibly a softer market for tech floats. There may be a few chewed fingernails before ikeGPS’s listing date – provisionally July 23.
IkeGPS has a good product – a device that attaches to a smartphone and allows customers, mostly in building or utility-related sectors, to measure up a large structure (building, powerpole etc) remotely by taking a photo.
It also has a large, strong partner – US grid giant General Electric (GE) – and around 250 American utility companies already using its GE MapSight product.
On the other side, this is an early stage float – ikeGPS isn’t projecting getting into the black for a couple of years, although is forecasting a doubling of revenue both this and next financial year. And the GE partnership is relatively untested too – the licensing deal was only signed in December 2013.
“The relationship with GE will be key to the success of the business in the medium term,” says Milford Asset Management senior analyst Brooke Bone. “But the relationship is quite new. We have to see if that will drive business.”
The present selection of tech stock floats are also susceptible what ANZ economist Cameron Bagrie is calling a “more discerning market” starting to appear over the last couple of months.
“When you have an economy going forward with all guns blazing, then all stocks benefit. A rising tide lifts all boats. But the macro-economic picture today is full of fluctuations and tensions, so success for companies comes down to the micro-economic level. “It’s about the basics – leadership, governance, capability etc. If you see value, you will pay.”
Retail brokers and some large institutions have taken up the full $25 million share allocation for ikeGPS, although there wasn’t enough interest for existing shareholders to sell $6 million of their own stock at the same time, a company spokesman says.
The shares will list at $1.10. Of the two tech floats this week, travel booking software company Serko listed at $1.10 on Tuesday, closed at 95 cents after its first day, and was up slightly at $1.01 at the end of trading on Wednesday.
Utilities and airports software company Gentrack listed at $2.40 last Wednesday, rose to $2.60 and closed at $2.49.