Institutions have thrown their backing behind London’s latest software initial public offering with Reading-based ActiveOps (AOM:AIM) due to join the junior AIM market on Monday, 29 March 2021.
The IPO has raised £75.7 million after selling an approximate two-thirds stake in the business to new investors. That will give ActiveOps a market value of about £120 million, trumping the rough £100 million valuation touted in recent press reports that had implied about £50 million of cash would be raised.
ActiveOps provides a cloud-based management process automation platform called Workware+ that helps allocate resources within and across complex operations in time, labour and knowledge intensive industries such as banking, and insurance the outsourcing industry.
Customers include the New Zealand Inland Revenue, Nationwide, PhilAm Life, Capita (CPI) and CoreLogic.
UK’S PRODUCTIVITY PUZZLE
Experts have claimed that the UK faces a ‘productivity puzzle’, with growth of output per worker declining dramatically since the global financial crisis of 2008 and 2009 despite its relatively high exposure to information and communication technology, which is supposed to boost national output.
‘Output per hour and real wages are now no higher than they were prior to the financial crisis,’ said Ethan Ilzetzki, a lecturer in economics at the London School of Economics.
‘This is despite the fact that the UK is near the top of the league table for ICT-intensive employment, where productivity growth has been the strongest.’
BUILDING ON EBITDA BREAKEVEN
ActiveOps grew revenues by 14% to £20.4 million in the year to March 2020, including 21% growth in SaaS (software-as-a-service) revenues to £16.2 million, 13% of which was organic.
‘The company runs broadly at breakeven EBITDA (earnings before interest, tax, depreciation and amortisation), but operating cash flow for 2020 totalled £1.2 million due to cash being paid upfront,’ said Megabuyte analyst Lee Prout.
Prout believes that ActiveOps’ IPO valuation of approximately 5.5-times 2020 enterprise value to sales still ‘isn’t too racy’ in the current valuation environment.
