A new, possibly quite exciting UK technology firm has confirmed plans to list on the London market next month, software reseller Bytes Technology.
A subsidiary of South Africa-listed technology giant Altron Group, Bytes is one of the UK’s large software licence resellers, according to tech analysis website Megabuyte, with a portfolio of software products that spans Cloud, security, software asset management, storage, and virtualisation, although most of its revenue comes from reselling Microsoft products; Microsoft Office, Microsoft 365, Microsoft Teams and the like.
It serves almost 5,000 customers (typically with 100 staff or more) from both the public and commercial sectors. Transport for Greater Manchester, Liverpool City Council and robotic process automation specialist Blue Prism (PRSM:AIM) are among its clients.
SOFTCAT 2.0 IS NO BAD THING
To call it a Softcat (SCT) 2.0 would not be unfair, given their similar businesses, and that’s likely to pull in investors - Softcat shares have rallied nearly 370% since its November 2015 IPO at 240p.
The relative lack of large-scale, profitable, cash-generative tech stocks on the LSE is also likely to see firm demand from both fund managers and ordinary investors.
Bytes certainly has decent scale. In the year to February 2020 it generated £722 million of gross invoiced income (up 31%), £79.2 million of gross profit (+25%) and £31.7 million of adjusted operating profit (+54%).
Like its peers, Bytes also tracks gross profit per customer as a key performance indicator (KPI), which grew from £14,100 to £16,100. Softcat grew gross profit per customer 8% in its most recent full year results to £24,800.
WAITING ON VALUATION DETAILS
Investors won’t get a steer on valuation until 1 December, when it publishes its prospectus, although the current owner Altron is thought to have set a pricing floor at £450 million.
At that price, it would leave Bytes on around 14.2-times trailing adjusted operating profit (versus Softcat’s 23), calculates Megabuyte.
‘We expect this is very much a worse case scenario number’, said Megabuyte’s Philip Carse.
The IPO is penciled in for 17 December.
