Technology’s COVID-immunity drives solid interest

A number of other floats in the technology space are said to be in the wings. Picture: NCA NewsWire/Joel Carrett

Technology stocks in Australia are believed to be gaining attention from major strategic groups offshore and local middle size private equity funds with companies such as RXP Services, MedAdvisor and DWS in their sights.

It comes as they also remain in strong demand from equity investors as well as private equity groups and strategic investors – all keen to capitalise on the current strong demand due to the fact that the companies are immune from the COVID-19 pandemic disruptions.

Both RXP Services and DWS are small capitalisation stocks that provide technology services and are listed on the Australian Securities Exchange.

 

MedAdvisor is listed with a $112m market value and provides mobile and web apps to manage prescription medicine use and it is understood to have fielded approaches from interested parties in recent months, although has not had any formal takeover bids.

While the top end of town may be relatively quiet amid the pandemic, when it comes to mergers and acquisitions activity, the smaller end is booming due to the popularity of technology stocks.

Last month, Californian-based IXL Learning made a $188.3m takeover bid for Mathletics owner 3P Learning, while internet services provider Opticomm is subject to a takeover proposal by Uniti Group. 3P Learning provides education software, developing, marketing and selling online educational programs to schools and parents of school-aged students.

Among the examples of strongly performing technology floats are the former Ratesetter business that is now called Plenti that increased the size of its initial public offering raise by $5m to $55m on the back of strong demand. It was priced at $1.66 per share, equating to a $280m market value.

Another is biotechnology company Aroa Biosurgery which listed with a $225m market value and raised about $45m. The company’s shares initially rallied strongly, but have fallen of late.

Wealth management infrastructure services provider FinClear is also believed to be involved in a funding round ahead of a float, while buy-now-pay-later provider Laybuy listed and has been earmarked for a listing with a market value of more than $220m.

A number of other floats in the technology space are said to be in the wings, with private equity funds currently searching for suitable candidates to capitalise on the demand.

At the larger end of the spectrum is investigative analytics and intelligence software company Nuix Technologies, which is partially owned by Macquarie Group and is understood to generate $176m of annual revenue. Expectations are that Nuix will be looking for a price that equates to about 10 times its revenue.