Pivotal Systems Corporation Inc. (Proposed ASX Code: PVS)

Opportunity to invest in fast-growing semiconductor industry- Pivotal Systems provides the best-in-class gas flow monitoring and control technology platform for the global semiconductor industry. This platform includes Pivotal’s Gas Flow Controller (GFC) product lines which offer high-accuracy, real-time monitoring, and control of the most critical parameters that are difficult to control in wafer processing today. Pivotal’s proprietary hardware and software utilizes advanced machine learning which will enable its preventative diagnostic capabilities. In turn, it will increase the magnitude of fab productivity and capital efficiency for existing and future technology nodes. In order to meet the rising demands, it now operates its high-capacity manufacturing facilities in the United States and Korea, and the company has annually doubled its total unit production each year since 2014. Pivotal supplies its flow control solutions to the semiconductor industry. Pivotal has gained rapid sales traction with a number of leading IDMs and OEMs, with unit orders growing 282 per cent between 2015 and 2017. It engaged investment banks like Moelis Australia and Shaw and Partners to explore a potential for listing on the Australian Securities Exchange.


Global Semiconductor Market Size (Source: Company Reports)

The Company and SaleCo are offering CDIs (CHESS Depositary Interest) to raise A$53.5 million (US$40.2 million). All applicants under the Offer will pay A$1.86 per CDI. The offer will be closed on 25 June 2018 and it is expected that it will be listed on ASX on 2 July 2018. The purpose of raising funds is to support its growth strategy including bolstering its sales and marketing capabilities within its target markets which will enable it to accelerate adoption amongst key customers. This will strengthen its balance sheet via repayment of an existing venture loan facility, enable some of the existing Shareholders to realise part or all of their investment, and provide liquidity for Shares, while the Company will benefit from an increased profile as a listed entity. On the same hand, there are few risks involved in investing like the Company doesn’t have a formal written contract in place with its customers who order and purchase products from Pivotal on an ad hoc basis. Development schedule for new products or market adoption of the new products may take longer than expected. Moreover, if new customers do not choose to use Pivotal’s products, the growth in Pivotal’s revenue may slow, or its revenue may decline, which will have an adverse impact on its operating and financial performance. It is to be noted that its revenue has otherwise grown significantly from 2016 to 2018. The Company has an intention to retain its future earnings to fund the development and growth of the business because of which it does not anticipate paying dividends to Shareholders for the foreseeable future.
 

Primero Group Limited (Proposed ASX Code: PGX)

Focussed on Growing Business - Primero is an engineering and contracting company that specialises in engineering designing, construction and providing operational services to the minerals, energy and infrastructure sectors. The main focus of Primero is to become a global engineering firm of choice. The Company issued a prospectus (dated 5 June 2018) but replaced it by issuing a new one (dated 19 June 2018). The Document consisted of an offer made by the Company of up to 62,500,000 fully paid ordinary shares for A$0.40 per Share to raise up to A$25,000,000 before costs (Offer). In FY17, Primero delivered revenue of A$52.1 million (representing revenue growth of 58.3% from FY16), earnings before interest, tax, depreciation and amortisation (EBITDA) of A$2.6 million and net profit after tax of A$1.2 million.

Equity Raising for Resource Companies (Source: Company Reports)

It expects a revenue of A$79.9 million, pro forma EBITDA of A$8.6 million and a pro forma net profit after tax of A$4.7 million for FY18. The offer will be closed on 4 July 2018 and it is expected that it will start trading on ASX on 6 July 2018. The funds raised from the offer will be used to raise capital to fund future project pipeline and growth opportunities and will be used in the acquisition of Sale Shares and in funding of bank guarantees. The exposure to battery materials sector is said to be key to the group with engagement with players such as Galaxy Resources. The Company expects a strong growth outlook based on the combination of a strong project pipeline with recent contract wins. There are few risks involved in investing like the Company derives its major revenue from a concentrated number of substantial contracts which may be terminated, delayed or incur unforeseen costs in performance which may not be recoverable, and the Company and its clients are exposed to a range of operational risks relating to both current and future operations. Moreover, industrial accidents can happen at any given point which may impact upon the Company’s reputation, growth prospects and financial performance.
 

Raiz Invest Limited (ASX: RZI)

Expansion of simple business model - Raiz Invest Limited is a first of its kind Australian, mobile-led, financial services business offering customers an easy way to regularly invest either small or large amounts, in or outside superannuation, using its micro-investment platform available via the Raiz app or its website. Raiz is a micro-investing product designed to make investing and saving simple.The Company started trading on the ASX from 21 June 2018. It successfully completed a public offer and raised $15.12 million at a price of $1.80 per share. Valuation of the Company came out to be approximately $119 million. The funds used will allow Raiz to deliver its growth strategy and will provide a broader portfolio of simple, easy to manage, financial services to its growing customer base. Since 31 March 2018, the Group has achieved over 3 per cent of growth in active monthly users, over 11 per cent of growth in customer signups and nearly 18 per cent of growth in funds under management. It has made a good progress towards its strategy to grow active users by broadening its product offering and through expanding geographically into Asia.

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Keyoperational metrics (Source: Company Reports)

It is well positioned to capture market share in superannuation with its product ranking in the cheapest quartile for a superannuation product, based on a review of over 400 superannuation fund (accumulation) products. It has incorporated few companies in Malaysia and Indonesia and has identified few potential partners in both markets. One has to keep in mind the changing interest rate which can, directly and indirectly, affect investment value or returns. Changes in financial markets, the economy, political changes, technological developments continually affect the value of investments in the Portfolios and the level of income it generates. The stock closed at $1.40 as on 21 June 2018, which is a significant drop from its IPO price of $1.80. The expenses of the company seem to be high in view regulatory requirements and other administration costs.

 
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