Xero looks to attract global growth funds through ASX consolidation

Cloud accounting software company Xero is hoping to attract a range of new institutional investors to its share register, as it prepares to enter a new growth phase when it consolidates onto the ASX on February 5.

Founder and chief executive Rod Drury told The Australian Financial Review he could see the business achieving the local status that Xero had reached in the smaller New Zealand market, where it was one of the top 10 largest listed businesses in the country.

“We’re at the end of the beginning. We’ve just hit cash flow break-even, but there is still massive growth potential,” Mr Drury said.

“Before you get to break-even you have to do a good job managing cash. When we start generating free cash, we will start thinking about the best use for it to create shareholder value.

“We’ve been slightly constrained to date in that we have had to get to a point where we generated free cash, but now we’re moving to an investment mindset.”

The business, which is still loss-making, has more than 500,000 Australian subscribers and 1.2 million globally, processed $640 billion of transactions through its platform in the year to June 2017 and reached more than 17 million local businesses and consumers.

When Xero announced it would be delisting from the New Zealand Stock Exchange in November, it surprised and angered New Zealand fund managers who saw the move as a red flag for their exchange, with Xero making up a significant percentage of daily trading volume.

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Source: Xero looks to attract global growth funds through ASX consolidation | afr.com