Luminis tapped for NetComm wireless review: PE courted
Potential trade and private equity buyers have been asked to take a fresh look at listed broadband products company NetComm Wireless.
Street Talk understands boutique adviser Luminis Partners is seeking to rustle up interest in the ASX-listed telecommunication infrastructure equipment stock, sending a teaser document to potential tyrekickers spruiking the company's recent performance.
According to prospective acquirers, the teaser is part of a wider strategic review aimed at exploring options for the company's owners including director David Stewart who is the largest investor with a 12.3 per cent stake.
Sources said would-be buyers have been asked to think about the company's recent financial performance and what it could be in the future. NetComm's revenue was up 69 per cent to $182 million in the 2018 financial year and earnings before interest, tax, depreciation and amortisation up 5.7 times to $21 million.
They're big numbers as far as NetComm is concerned - which might make it the perfect time to test buyer appetite.
The record performance was attributed to the company's ability to execute "significant projects with Tier 1 telecommunications operators, delivering on our promises and starting to see the pay-off from our investments" in recent years, with sales increases in key growth markets of Europe, the UK and North America.
Private equity firms are known to be running the numbers, including Australian mid-cap firms that have had success in the information technology services sector previously. However, they want to know more about the potential process.
NetComm is just another one for Justin Milne - the former ABC Corporation chairman who is also steering accounting software company MYOB through its takeover talks with private equity giant KKR and is in charge of NetComm's board.
Despite the recent performance, Netcomm shares have traded down heavily this year.
They were dramatically sold off at the company's result in late August, and have traded sideways since to give the market about a $100 million market valuation. The sell-off came as CEO Ken Sheridan told investors underlying earnings were likely to be flat in the 2019 financial year - even though revenue was likely to be 15 per cent to 20 per cent higher and asked them to wait until the 2020 financial year for a step up in both revenue and earnings.
NetComm did not comment when contacted by Street Talk
