Xero is on the hunt for new acquisitions and plans to raise $US300 million through an issue of convertible notes it will list in Singapore.
The software developer expects to break even on a cashflow basis in the March 2019 year excluding merger and acquisition activity, and plough any surplus back into the business.
Xero has already started putting its feelers out, buying Canada's Hubdoc in August for up to $US70 million, and said yesterday it planned to build a war chest for other investments.
The company will sell the senior unsecured notes through a subsidiary and plans to list them on the Singapore Exchange Securities Trading. The notes will be settled for cash in October 2023 at a 30% premium over the reference share price unless Xero opts to issue shares instead. The interest rate on the notes has not yet been set.
"We see the additional financial flexibility provided by this offering as supporting the significant opportunity we have to enhance and extend Xero's small business platform and ecosystem capabilities through the pursuit of complementary targeted acquisitions," chief executive Steve Vamos said.
The Singapore listing follows Xero's decision to quit the NZX earlier this year while retaining its Wellington headquarters. It listed on the NZX in 2007 at $1 and left at $34 in February this year.
Xero also said it was comfortable with analyst forecasts for 2019 revenue of $528million to $558million and earnings before interest, tax, depreciation and amortisation of $66million to $94million.
The company also has a $100million stand-by banking facility with Bank of New Zealand and ANZ Bank New Zealand to draw on for M&A
