Xero backs itself with $413m convertible notes

Cloud-based accounting company Xero has backed itself to continue growing strongly, raising $US300 million ($413 million) in five-year convertible notes with an exercise price 70 per cent above its share price on Thursday.

Capital raising via the issue of convertible notes is relatively commonplace among US technology companies – NASDAQ-listed Atlassian raised $US850 million this way in April – however Xero chief executive Steve Vamos said it was “groundbreaking” for an Australasian company.

“If we think we’ve got strong growth potential in the future, we don’t want to issue stock at current prices and dilute our shareholders,” Xero chief financial officer Sankar Narayan said.

“We were well placed to raise in this way because we’re already a global brand name, with 1.4 million subscribers in over 180 countries. The roadshow went from Zurich to London to Asia and everyone already knew Xero, so it was easy to communicate the growth prospects.”

The offer was oversubscribed and Mr Narayan said no investors received their full initial allocation.

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Source: Xero backs itself with $413m convertible notes | afr.com