Digital auction marketplace Auction Technology (ATG) confirmed its intention to float on London’s Main Market on Monday, having revealed its IPO ambitions last week.
Funds managed by Merian Global Investors and Jupiter Asset Management, among others, have agreed to act as cornerstone investors in the offering, buying shares worth £100 million, the company said, but up to £250 million of fresh funding is being targeted.
BUSINESS MODEL
Auction Technology runs an online platform that helps connect auctioneers with a global pool of bidders, including businesses and private collectors. The company operates across six marketplace brands; the-saleroom, ibidder, Lot-tissimo, Proxibid and separate Bidspotter marketplaces in the US and UK.
A wide selection of goods are auctioned, including art, antiques and jewellery, industrial products and consumer surplus and returns. Auctions can be online-only or combined with a live auction.
Auction Technology charges commission fees that range from 3% to 5% of the selling price struck on lots, plus a fee on vendors to place their stock on its marketplace.
In the year to September 2020, Auction Technology generated pro forma revenues of £52.3 million (within which the overall company grew 12% and Proxibid grew 40%) and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £22.3 million, with period end net debt at £200 million.
IPO RATIONALE
On top of clearing its debt to zero, Auction Technology wants to use the IPO to create and raise brand awareness, offering liquidity to shareholders and provide access to further capital to maintain its organic expansion and complete further acquisitions.
‘Auction Technology’s expected £600 million valuation is in line with our thoughts last week with attached multiples of double-digit trailing sales and mid-to-high 20s trailing EBITDA,’ said Megabuyte analyst Rob Warensjo. That pitches the valuation at a slight premium to the software sector averages on the Megabuyte platform, the analyst said.
‘This is reflective of its impressive margin and growth profile, further Proxibid merger synergies on offer and broader structural growth drivers, such as the pandemic accelerating the shift to online auctions,’ added Warensjo, and may point to where software company valuations ‘might be heading in 2021’.
