Investors facing $230m loss in Wynyard failure

The failure of software firm Wynyard is ‘‘another tragic example of retail investors losing their money chasing dreams’’, says a fund manager who is pursuing a class action lawsuit against the company’s directors.

NZX-listed Wynyard has been put into voluntary administration, confirming the worst fears of investors who had pumped $172 million into the business.

The company was one of seven technology firms that went public between 2013 and 2014 in the wake of the sharemarket success of cloud accounting company Xero, and is the only one to have failed.

As of the start of this year, Wynyard employed just under 300 staff.

The company raised $172m from investors from its initial public offering and a series of subsequent capital-raisings.

Fund manager Gregory Marshall said investors would probably be out of pocket by $220m-$230m once on-market purchases of its shares were factored in.

Marshall is spokesman for a group of disaffected shareholders who have appointed a partner from law firm Minter Ellison Rudd Watts to pursue a class action against Wynyard’s directors. They contend that Wynyard misled investors about revenue forecasts, the status of a $30m capital raising and other matters.

Wynyard was spun out of privately-owned Christchurch software firm Jade and sells database software that is customised for crime-fighting agencies and large commercial organisations that need to manage similar risks, such as fraud.

Though it has chalked up a raft of major clients including the Reserve Bank and Thailand’s Customs department, it saw its share price savaged this year because of issues with a $27m contract with a ‘‘national security bureau’’ that forced it into a heavily-discounted rights issue to raise cash.

Marshall has never owned shares in Wynyard personally and said he did not believe it had a great product, but blamed poor governance for the firm’s woes.

The company’s failure would bolster the planned lawsuit, he said. He cited red flags including ’’over-promotional hype’’, such as a suggestion last year that the company would be able to raise money at a premium to its share price at the time, he said.

However, the former chief executive of NZX-listed telecommunications firm TeamTalk, David Ware, tweeted his sympathy for the firm, saying listing the company had given it the best chance of success.

Wynyard said in a statement to the NZX that the directors had considered ‘‘all available options’’ including potentially raising additional capital and drawing on a $10m loan, but had concluded that ‘‘neither raising further equity nor incurring debt was in the best interests of the company, its shareholders or other stakeholders’’.

KordaMentha partners Neale Jackson and Grant Graham have been appointed as administrators. A first creditors’ meeting will be held on November 4.