I got limited time today during lunch time, so left a bit early.
Aidan Flynn kept Mike well within boundries all the time, everytime I asked a sensitive question, Aidan would blow the whistle and halt Mike from answering. Even though I know there are questions shouldn't answered, but I still repeatedly tried, not to get a direct answer, but more to get a sense of feeling what he is about Not to say.
Given my limited time, my focus today was to try to get some ideas about how much Mike Pivac values FBR.
1. Take over and valuation (price tag of FBR).I asked about the potential bids for FBR's IP by CAT and other interested parties, not allowed to answer, but...
Mike explained how FBR was now laughed at by large advisory firms and investment bankers, that the whole timing of FBR's public listing was so wrong, which I agree, the view is if to achieve the best outcome(valuation) for FBR to go public, perfect timing should probably be in 2020 or 2021, when FBR sorted out all the partnership, locked in all the potential commercial territories and ironed out all the kinks in HX, it would then become a very easy sell for investment banks to sell it to the US investors, my(not Mike's) gut feeling is this can easily be a $500+m listing in US, IF FBR HAS NOT LISTED IN AUSTRALIA IN THE FIRST PLACE!!!
Mike's frustration was at time of 2013, a 23 ton excvator sized Harian 105 doesn't appeal to any venture capitals at all in Australia, there was no money to get the snowball rolling, eventually they turned to reverse takeover and raised the 1st lot of public funding of $5m and after 4 years now we had HX.
Mike's frustration is, it was unfortunate that they had to go Public so early but Pivacs were out of cards, my thought is Pivacs are probably very annoyed by the demanding retail shareholders due to open to public so early, with his comment "
if we didn't go IPO at 2015 you guys wouldn't even sit in this room today", I have to note, his comment was not in an aggressive way, but telling the very truth of how FBR ended up here today.
Then I asked "
now you are listed, which means you are open to aggressive (on market) take overs..". Mike agreed but he said the Pivacs held a large sum of shares so they are relatively safe, which re-enforces my view I made yesterday, the large number of performances shares A B &C are essential to maintain FBR under founders' control, this is also of best interest to mushrooms like you and me, so that the company doesn't get ripped apart by some Chinese company and left an empty shell to us shareholders.
Mike further added he is not interested in selling FBR after 16 years of hard work for just "
6, 7 cents", then I tauted, "
how about 50 cents?", interestingly even though he knew he couldn't answer directly, he was shrudding his shoulders and about to make an indirect comment, RIGHT THEN, Aidan Flynn halted him again, "
We can't comment on that". My feeling on that moment, is Mike isn't very satisfied with that price either, but anyone noticed his body language please feel free to comment here.
Side notes:
2. Partnership & Mid East contractsMike made a few comments about picking partners, not just mid east, FBR is very cautious about who to partner with, they could achieve mass manufactouring a lot easier and quicker as there had been offers to quick scaling it up, but it would not be safe in long run, examples are after a few years of running, they would lost IP and got kicked out of the game, as in many countries and regions, their potential partners make the rule of game, none of those places have regulatory and compliance issues as stingy as we have in Australia, FBR is just a small boy with the best toy, they will not easily share it on purely good promises, which make sense WBG is the best bet so far.
Similarly, CAT VC who FBR MoU'ed with in 2017, was proposing a 7 year roll out (typical CAT business model), taking 7 years to pull HX apart (and get the core DST which CAT failed to develope internally before), redesign every component, make it reliable and reputational, rebrand FBR into CAT brand, pay FBR a very small loyalty going forward for every unit sold, Mike said it would be a desaster to easily sell out HX like that after 16 years of hard work, it's not of best interest to shareholders either.
3.Why only raise $5m + SPP?Interestingly, Aidan's comment was "there are things we can't yet communicate but we have raised this for specific reason?"
Then I left right there and back to work. On my way back, one thing was quite obvious to me is, FBR is not a scam(relief!), Pivacs are not here to make good salary and bonus, they have had TOO MUCH skin in this game, examples like last week Mike was lobbying with Minister of Innovation, Secutary Treasury and a lot of high profile politicians for the new R&D grant scheme, everybody in the government knows FBR, everyone was fancinated just like you and me, but they still couldn't write FBR any cheques, Mike was very frustrated about the overal innovative environment in Australia, for the lack of support from government policies.
My ending comment is, this is still risky as there so many things could go wrong, for every step they make, they are treading carefully, but they are definitely aiming for the big end game, will they survive until the fat lady sings, no one knows for sure, but I'm glad they have got a team of talents behind them, they have got all the brick manufacturers setting FBR for success so they can also survive (average bricklayers 50s everywhere), we will not see a spike ever again like when we saw CAT MoU did, this is such a big and risky game they are playing, probably more significantly than a lot of ASX100 companies can achieve, shall they succeed, and for hell it would be a story for Autralian people to talk about for decades.
Investing FBR to me has always been the mere possiblity of reaching to its exponential scalabitlity, Pivacs will then be slicing a huge huge fxxxing cake!
