PPH-Pushpay

[BlackPeter]

This time last year Pushpay = USD$1.5B market cap

Gets taken over at USD $900m

Success story

PPH was always a story of hype and their combined earnings and growth never justified their market cap.

So I guess it is just a story of hype slashing around ... and currently fading away.

Clearly - successful have been all the people who listened to the warnings of the market and sold together with the founders who created the bubble.

Owners selling out is nearly always a bad sign - ignore it at your peril.

[winner (n)]

PPH was always a story of hype and their combined earnings and growth never justified their market cap.

So I guess it is just a story of hype slashing around ... and currently fading away.

Clearly - successful have been all the people who listened to the warnings of the market and sold together with the founders who created the bubble.

Owners selling out is nearly always a bad sign - ignore it at your peril.

Yep BP

Early last year PPH value was US$500m fundamental value PLUS heaps of hype

Mid of last year PPH value was US$500m fundamental value LESS US$200m after Molly told analysts not to ask stupid questions about customer growth PLUS a bit less hype than before

Now people willing to buy it for US$500m fundamnetal value PLUS hoping they can make something out of the $400m hype

[Shareguy]

Agree BP. Selling out not a good look. Was told at the time might have something to do with a messy divorce. I have only brought in this last year so average cost just under a buck.  A number of big investors paid higher than offer price, so will be interesting. 

Fbar say the price offered leaves the door open for other bidders.

Trading on a forward multiple (EV/sales) of 4.2.  PPH paid 8.8 for resi media and 5.8 for CCB   

[Gerald]

It's probably unlikely they get another bidder - remember they started shopping this around like 5 or 6 months ago and this is the best they got. Plus there would have to be a decent premium to get BGH/SS to sell their stake. You would probably need a strategic buyer and this company really doesn't seem too innovative or exciting - really just a basic product that rode a tailwind of the shift to digital donations.

Again - those mutiples were from a different time.

[winner (n)]

Agree BP. Selling out not a good look. Was told at the time might have something to do with a messy divorce. I have only brought in this last year so average cost just under a buck.  A number of big investors paid higher than offer price, so will be interesting. 

Fbar say the price offered leaves the door open for other bidders.

Trading on a forward multiple (EV/sales) of 4.2.  PPH paid 8.8 for resi media and 5.8 for CCB   

PAy too much for resi and CCB?or have times changed

Median multiple for US cloud companies 5.4 times ....25th percentile is 3.3 times

Median was 19 times in Feb 21

[winner (n)]

Grant Samuel still to produce an independent report

Now they know the answer I reckon they'll come up with this range $1.30 to $1.42 ....and come up with heaps of tables and comparatives to show how they came up with this.

So $1.34 might be low end of range ....but enough to see the deal done.

[winner (n)]

Fund managers not happy ...of course they aren't

But when some make comments that Pushpay's disclosure have left a lot to be desired and they haven't engaged much with investors somethings wrong ....esp when most of those fundies seem to saying that even the Board isn't confident in delivering on their 10% pa growth and have hoisted the white flag  etc etc

A lot here if you can access
https://businessdesk.co.nz/article/markets/shareholders-accuse-pushpay-board-of-waving-the-white-flag

[winner (n)]

Enough reasons for punters to reach for the sell button .............and hedge funds loving that and mopping up whats offered

https://www.nbr.co.nz/hunters-corner/hedge-funds-taking-a-punt-on-pushpay/
maybe paywall

[Shareguy]

No notes from Craig's on this until today. Now we no why.

Craigs Investment Partners Limited is providing advisory services to BGH Capital related to the acquisition of Pushpay Holdings Limited by Pegasus Bidco Limited (a consortium made up of BGH Capital and Sixth Street). A fee will be received for acting in this capacity. Sir Ralph Norris, the Chairman of Craigs Investment Partners, is a Senior Advisor to BGH Capital and a Director of Pegasus Bidco Limited, as well as its shareholders Pegasus MidCo II Limited, Pegasus MidCo I Limited and Pegasus Holding NZ Limited. We remove our recommendation, estimates, and target price

[winner (n)]

Clare Capital did some numbers as to what the acquirors can get of this.

They assumed acquisition part funded with debt and over the next 5 years ARPC grows at 2% pa / Customers at 8% pa and with a slight increase in ebitda margin they could increase ebitda to 102m. After allowing for interest, capex and tax good cash flows.

In five years time could result in an exit EV of 1,693m and after debt a IRR of 18% for the acquirrors

All numbers on a back of an envelope but that's how aquirors think

[Waltzing]

" Sir Ralph Norris,"

wasnt he the man that taught the likes of West Pac how to make more and yet more money?

[Left Field]

Results out...... with lower FY23 expectations

https://www.nzx.com/announcements/402029

- Positive year on year growth in key metrics albeit at a lower rate than anticipated due to investment for future growth, the go-to-market strategy reset and broader macroeconomic factors presenting ongoing challenges.

- Operating revenue of US$103.0 million, up 10% on prior comparable period (pcp).

- Underlying EBITDAF of US$26.8 million, down 10% on pcp.

- Total Processing Volume increased to US$3.6 billion, up 2% on pcp.

- Increase in Customer numbers (+4% to 14,602 Customers compared to 30 September 2021).

- Strong operating cash flow resulting in net debt of US$35.1 million, down from US$47.2 million as at 31 March 2022.

- As updated on 28 October 2022, guidance for FY23 is Underlying EBITDAF of between US$54.0 million and US$58.0 million. Pushpay continues to forecast positive operating revenue growth but has lowered expectations to be between 4% and 8% for FY23.

[Shareguy]

On balance I think this deal is going to go ahead, however there are so many other opportunities that I sold half my holding. I think I can do better in the timeframe than the potential 5c loss.

[Basil]

On balance I think this deal is going to go ahead, however there are so many other opportunities that I sold half my holding. I think I can do better in the timeframe than the potential 5c loss.

Hedging your bets seems like a smart pragmatic move to me.  Nice move as long as you don't reinvest the sale proceeds into OCA 😜

[winner (n)]

An analyst (probably a grumpy pissed off one) asked at the briefing whether the acquirers could lower the offer price seeing the results were so bad.

No worries ....they saw the results before the made a bid.