A leading investor in aerial imaging software company Nearmap is dismayed at the possibility it will fall into private equity ownership, just as the company hits its straps.On Monday, the ASX-listed tech company revealed it had landed in the crosshairs of San Francisco-based private equity firm Thoma Bravo, which had lobbed a non-binding $1.1 billion offer.Dr Rob Newman has led Nearmap since 2015. Philip GostelowThe deal sent Nearmap shares flying 26 per cent to $1.90 at 12:30pm - its highest price since November last year.The proposal, which was announced ahead of Nearmap’s full-year results announcement on Wednesday, was priced at $2.10 per share - a 39 per cent premium to Nearmap’s $1.51 closing price on Friday, but an 83 per cent premium to its $1.15 share price on July 5, the day before Thoma Bravo made the bid. The companies have entered a seven-day exclusivity period, in which “no-shop, and “no-talk” obligations apply.Speaking to The Australian Financial Review, QVG principal and portfolio manager Chris Prunty said he would be disappointed if the business was acquired.“We thought it was just getting started,” he said.“Thoma Bravo have nailed the timing of their offer. Sentiment is against the stock due to scepticism around cash-burning tech stocks, but Nearmap’s operational performance has been accelerating, and their burn was reducing.”Nearmap provides users with subscription-based high resolution aerial imaging, with images updated multiple times a year. It captures multiple viewpoints to stitch together images to create 3D representations. These can be overlaid with artificial intelligence and are used by customers to do everything from flood zone assessments to property valuations for tax purposes.It was founded by Stuart Nixon in Perth in 2008 and current CEO Dr Rob Newman has been in the top job since October 2015.It reported on Monday that its annualised contract value - the firm’s performance metric of choice - was expected to be $159.9 million as of June 30, coming in at the top end of its $150 million to $160 million range.Its cash balance also exceeded projections, coming in at almost $94 million, with the business having spent $10 million less than expected supporting the growth of the company.The $2.10 per share price implies a 6.5 times estimated 2023 sales multiple.With no substantial institutional investors - QVG is one of the largest holders with 3.5 per cent - it’s unlikely Thoma Bravo will need to do much campaigning to get the deal across the line, should it proceed.Other shareholders include New Zealand-based institutional investor Pie Funds, Selector Funds Management and Anacacia Capital.While Nearmap declined an interview request on Monday, the tone of the announcement suggested the board would be supportive of a buyout by Thoma Bravo, should it progress.Nearmap has agreed to a $US3 million expense reimbursement fee, if a deal between the two does not eventuate within six months, or it pursues an alternative transaction with a different bidder.“It will only enter into a definitive agreement with Thoma Bravo if it believes a transaction is in the best interest of shareholders,” Nearmap’s ASX statement read.It’s not the first time Thoma Bravo, which has $US114 billion in assets under management, has been interested in the mapping technology space. It was the under bidder when Vista Equity Partners acquired Nearmap rival Eagleview in 2015.The fund has a reputation for paying managers of its assets very well if they perform.Thoma Bravo has made a number of recent technology acquisitions in the last year, including buying business performance software company Anaplan for a 46 per cent premium in March, and financial technology business Bottomline late last year for a 42 per cent premium.Nearmap hit a peak of $4.29 per share in mid-2019, but was sold off heavily amid widening losses and earnings downgrades.
NEA Price at posting:
$1.87 Sentiment: Hold Disclosure: Held
