If it does come about then this is quite a big one for the ASX. Profitable for last 8 years.
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The chief executive of closely watched Australian forensic software firm Nuix has revealed it will look to the ASX, rather than the US or London, if it pulls the trigger on a highly anticipated billion-dollar IPO. Speaking with
The Australian Financial Review on the sidelines of the Black Hat tech security conference in Las Vegas, Nuix CEO Eddie Sheehy said that while plans were not yet confirmed to go public, it could happen as soon as next year, and that it would be a big listing for the ASX. The listing would come as a boost to the ASX, which is attempting to position itself as a regional hub for tech listings, yet was
passed over in favour of the Nasdaq by Atlassian for its $US4.4 billion listing last year. The local bourse has attracted a number of bigger tech listings in the last year, such as
Wisetech Global and
Redbubble, but has mainly seen a rapid flurry of smaller tech start-ups list via the backdoor route with reverse takeovers of failed mining companies.
Mr Sheehy said he believed Nuix would not need to look overseas to bigger stock exchanges in pursuit of a suitably high valuation. "In 2017 it's a possibility …We crossed the threshold of scale for an IPO a while ago but there were a few things we wanted to achieve within the company before we looked at that," Mr Sheehy said.
"I suspect we'd get just as good a float out of Australia now as we would anywhere else. In fact better, because I think our shareholders are better known, respected and trusted, there's nothing that I've seen in London or Nasdaq that makes me believe we'd get a better outing."
Panama Papers
Nuix achieved a level of prominence earlier this year when it
donated its document analysis programme to the International Consortium of Investigative Journalists (ICIJ) to sift through the millions of leaked documents from Panamanian law firm Mossack Fonseca. While not a well-known name in general business circles, the 10-year-old company has more than 1500 customers in over 60 countries, including financial institutions, corporations and government departments. It has been profitable for eight years, and in March
announced a fifth straight year of more than 60 per cent annual compound growth. "I think Australia is a much more sophisticated market than people give it credit for," Mr Sheehy said.
"There's an awful lot of superannuation money, they like technology stocks and the Nasdaq is a long way away. I don't see a reason to move and I think Australia has been good for us." With the likely IPO next year, Mr Sheehy said he believes long-term stable ownership of the business had been an asset. Five years ago Macquarie Bank took a large stake, buying out a number of angel investors. "It is hard to understate how important that was," he said.
"The angel investors were brilliant and put up money when no one else would but they weren't of the scale and understanding of how they could grow the company, which was then 40 people, and allow us to scale to 400 people."
Though early sales to federal government agencies drove the company's initial growth, Mr Sheehy said more interest by corporate Australia and the public sector in buying software and services locally was the key to the local industry's development.
Government support
He said he was positive about the sentiment towards the tech industry in Australia from a government policy perspective, but believed more local tech players would flourish if more government departments were open to buying services from smaller companies. "Nuix's experience was probably different to 95 per cent of Australian technology companies, in that we had Defence, Customs, ASIC and the ATO as customers. Most technology companies don't get that level of customer support," Mr Sheehy said.
He called out the New South Wales government as being the most in need of changing the way it buys software, to make it more accessible to local firms. "I have more customers in Canberra, Melbourne or Brisbane than Sydney," he said. "I know New South Wales wants to be seen as a tech-friendly environment, but it needs to do better … it is so much easier to go overseas when you have your home base as a customer." At a federal government level, Mr Sheehy said, he was generally positive about last year's Innovation Statement. However, he believed there was still some way to go. As an established company, Nuix does not meet the criteria for the concessional treatment of options set aside for start-ups. "I'd like to see the option agreements further looked at," he said. "Companies across America of every scale give away options. It's a core tenet of their hiring policies and yet somehow it's not enabled very well here in Australia."
The author travelled to Las Vegas as a guest of Nuix.
(20min delay)