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Published 14 October 2013 11:00, Updated 17 October 2013 04:44
Venture capitalist Peter Thiel is a new investor in accounting software company Xero. Photo: Bloomberg
Accounting software company Xero has raised $NZ180 million ($159 million) of new capital as it positions for global growth.
The new funds include further contributions from existing investors such as Valar Ventures, backed by Peter Thiel, the German-born US-based venture capitalist and co-founder of PayPal, and Matrix Capital Management.
The company, which offers cloud-based accounting and bookkeeping software, indicated in a statement to the Australian Securities Exchange that US investors account for $NZ147 million of the capital raised.
Xero, which listed on the ASX last November and also maintains a listing on the New Zealand Stock Exchange, has been a market darling this year, rising from $4.48 to a 52-week high of $16.90 in late September.
The rise has catapulted early investor Craig Winkler back into the BRW Rich 200.
Shares were trading at $15.72 a share on the ASX when trading was halted on October 10, pending the announcement. The new shares were priced at $NZ18.15 a share ($16.01) for 9.92 million shares, representing 8 per cent of the shares on issue after the raise.
The capital raising is intended to build a stronger management team in the US and position for global growth.
“Xero has had seven years to build the best global accounting platform,” says Xero chief executive Rod Drury.
“That investment puts us in a strong position as the cloud market accelerates. The calibre of our investors and our strong cash position sends a clear signal of our aspirations to serve millions of small businesses around the world and attract the world’s best talent.”
The company recently reported it had 211,300 paying customers on September 30, up 89 per cent year on year, and revenue for the first half of the 2014 financial year is expected to reach $NZ30.3 million, up from $NZ16.5 million last year.
However, Xero’s losses have been growing in line with its revenue. The last set of annual results, for the year ended March 31, reported a net loss after tax of $NZ14.44 million on $NZ39.03 million of revenue and 157,000 customers.