Updater looks to raise $50 million to buy software companies
Van … relocation tech company Updater wants to buy the “back-end” used by movers. Picture: Getty
Relocation service Updater is looking to raise $50 million in an institutional placement so it can buy two software companies that make sales and logistics programs for moving companies.
Updater (ASX:UPD) is one of the ASX’s hottest small cap tech stocks, moving from about 52c to $1.40 over the past 12 months.
Its platform includes a suite of services to help people while they’re moving house, like updating their postal address, connecting gas and electricity and setting up mail forwarding.
That might sound a bit old hat in Australia, but Updater has found huge demand for it in the US.
Updater’s platform can be white-labelled by other companies like real estate agents or movers, and it’s been used more than 17 million times.
The company announced on Wednesday its intention to buy two US companies, IGC Software (IGC) and Asset Controls (ACI), and bundle them into a new division called MoveHQ.
The acquisition will be for a total value of $US21 million ($26 million), including $US16.8 million in cash and $US4.2 million in stock.
“IGC and ACI have developed the relocation industry’s most widely-used software products,” the company said.
“IGC and ACI customers include the majority of the largest van lines and hundreds of their local agents, as well as many of the premier independent moving companies.”
The two companies earned about $US7.2 million revenue last year, and Updater believes their products and customer bases will complement its own.
“This highly compelling transaction brings together the ‘front-end’ platform on which millions of consumers are organising and completing moving tasks with the ‘back-end’ software applications that the premier moving companies leverage to run their businesses,” said Updater founder and CEO David Greenberg.
In addition to the purchase of ICG and ACI, the $50 million capital raise will be used to fund the rollout of Updater’s new insurance division and increase working capital.
Updater shares remain at $1.40 since entering a trading halt on Tuesday, pending an announcement on Thursday.