Sports club software start-up MSL Solutions raises $16 million ahead of IPO
14 November 2016
Australian sports software start-up MSL Solutions has closed a $16 million capital raise and acquired two major European firms, as it prepares to go public on the ASX in the first half of 2017.
The Brisbane-based firm had previously planned to raise $5 million in a pre-IPO round and completed that round in late March, however, it sought further funds in order to acquire British hospitality software provider Verteda and golf tournament software firm Golf Box.
"In March we were looking at how to enter international markets and we'd had some long term partners in that space who integrate our technology and understood their customers very well," MSL's chief executive Craig Kinross said.
"It made sense for us to work with them and by acquiring these businesses it lets us go into international markets with a lower risk strategy. We're able to bring the companies together in a very complimentary way."
In the latest funding round MSL has brought on board four institutions – Acorn Capital, Regal Funds Management, Ellerston Capital and Eight Investment Partners – and it had strong support from its existing shareholder base of 120 high net worth individuals.
MSL provides cloud-based and on-site software services to sports clubs as well as a business analytics platform and connections to media channels.
It has more than 600 clients (pre-acquisition) including the MCG and ANZ Stadium, as well as more than 50 per cent of Australia's yacht clubs and 70 per cent of private clubs such as the Melbourne Club and the Athenaeum Club.
It also has a large share of Australia's top golf clubs.
Through the listing in the first half of next year it will seek another $10 million, but unlike most tech companies that raise a relatively modest amount of capital through the initial public offering, the business already has substantial revenue.MSL recorded about $12 million in revenue this financial year and with the acquisitions Mr Kinross said the firm was now tracking toward $35-40 million in the 2019 financial year.
He said Verteda, which provides a food and beverage hospitality platform to stadiums, and Golf Box provided complimentary services to MSL and it intended to leverage cross-selling opportunities with their strong client bases.
"The next 12 months are going to be a very exciting time, but we're under no illusions about the effort required to ensure these companies are successfully transitioned into the group," he said.
"For the customers it will be business as usual and we won't look at major changes to the staffing or products, we want to add cross-selling opportunities across the markets. One of our MSL executives will also relocate to the UK, as well as a mergers and acquisitions manager... to ensure a smooth transition."
As well as sports clubs, MSL has also expanded into universities and retirement villages, which also have a focus on members.
The company will use the money it will raise through listing to further enhance the platform and position the company to be a market leader in the sports clubs space globally, with Mr Kinross tipping the market to undergo a period of consolidation, which will result in a focus on better industry standards.
"We're becoming a more scalable organisation domestically and internationally," he said.
Unlike many listed small cap tech companies, which place a higher emphasis on growing revenue over reaching profitability, Mr Kinross focuses on both.
"While some companies try to fast track growth by taking higher risk strategies and throwing capital at it, we've tried to do it within our means while maintaining positive cash flows," he said.
"It's part of our ethos to ensure the revenue minus costs equation makes sense."