Fresh capital raise talk swirls around Sharesies after loss
We have always been pretty opportunistic on capital; if the opportunity presents itself, we’ll have to take it. Sharesies co-founder and co-chief executive Leighton Roberts
Could Sharesies be on the hunt for more capital? Company executives have said it’s not on the immediate horizon, despite its latest loss.
Trade Me’s holding company, Titan Parent New Zealand, which has a 13.5 per cent interest in Sharesies, said the investment platform’s total loss from continuing operations was $25.1 million in the year to June 30 while revenue was $20.7m.
That implied an annual expenditure of $45.8m, or roughly $3.8m a month.
“This would imply that Sharesies may be out looking for more capital shortly,” said Eliot Schwartfeger, a senior analyst with Clare Capital.
Sharesies was founded in 2017 with the goal of making investing in New Zealand equities easier.
It now has more than 500,000 investors across New Zealand and Australia, and more than $2 billion in funds under management, according to Clare Capital.
Its latest funding round took place
in October 2021 when it raised $50m from a list of investors led by venture firm Amplo.
Co-founder and co-chief executive Leighton Roberts told BusinessDesk
that Sharesies has “a lot of runway at the moment”, thanks to that raise.
“We are not on an urgent hunt for capital or anything like that,” he said.
“[However], we have always been pretty opportunistic on capital; if the opportunity presents itself, we’ll have to take it.”
He noted that the capital raising environment has changed given the current climate but “I think there is still money there for good businesses”.
According to Sharesies chief financial officer Toni Moyes, the annual result “reflects our strategy of continued investment in growth, including new products”.
“As a regulated financial services provider, we are continuously monitoring our capital requirements and maintain sufficient capital at all times,” Moyes said.
Meanwhile, Chris Lee, executive chair and founder of Chris Lee & Partners, has raised questions about the valuation loss at Sharesies based on the Titan numbers.
He noted Titan values its 13.5 per cent stake at $7m, meaning 100 per cent of Sharesies must be worth about $52m.
“Yet Sharesies last year raised money at a price that valued the company at $500m,” he said.
He expected “its next capital raise to be priced rather more wisely than the last”.
According to Clare Capital, however, Titan’s method accounts for the initial investment value, its pro-rata share of subsequent profits and losses, and isn’t a market valuation number.
Clare Capital noted that Pathfinder KiwiSaver, which also publicly releases its financial statements, disclosed a 0.36 per cent shareholding in the company.
According to Pathfinder’s latest fund update, Sharesies has a value of around $430m, it said.