Girovend shifts to b2b

The company said that its b2B internet strategy, including a number of acquisitions, will be financed by a 19.4m fundraising process and will incorporate a number of key executive appointments, a change in name to Transacsys, and a transfer from the official list to AIM.

GiroVend plans to raise 19.4m through a placing and open offer of 19.4m shares at 100p each to finance the creation of vertical market hubs (vortals) in a number of industry sectors, with the target of building five b2B portals over the next year, each with the capacity for content, information exchange, e-commerce and the full execution of transactions through to delivery.

Earlier this month, the company completed the acquisition of Proactive Interactive which develops and sells management profiling products geared towards internet sales, and will be incorporated in the company's human resources vortal. They have also entered into conditional agreements for another three acquisitions with a total value of 7m and a joint venture agreement, which will lead to the development of a vortal for the dental industry.

Paul McGrane, chief executive said that GiroVend, with a market capitalisation of between 18m-20m, was not “wildly exciting” and its organic growth was not sufficient to illicit interest as a public quoted company. “Transactions is what we specialise in and in the future, these will be done mostly on the internet with much greater efficiency and less cost. GiroVend facilitates and manages transactions in the marketplace so we think it's valuable to define our future in terms of the internet by creating b2b portals where these take place.”

McGrane said that the company fully intends to develop and grow its old line of business but expects the bulk of its revenues to be derived from its internet strategy. “You'd be crazy not to carry out this proposition,” he said. “We're going to roll it out over a number of portals to achieve economies of scale. There are a lot of opportunities and the money we've raised is enough to do five or six portals.”

He said that the company had so far spent 2.5m in cash on acquisitions with the rest settled in shares. “We haven't already blown half the money. Proactive Interactive was entirely a paper acquisition. We bought it because, in order to create five or six portals, we need strong management skills, so we acquired a company with 20 qualified people in it already to work full time for Transacsys.”

The decision to move to AIM was due to stock market obstacles and time delays to complete acquisitions. “Trying to do an acquisition on a full listing takes forever and is expensive,” said McGrane. “In this marketplace, a week is a lifetime. There were so many obstacles and we needed to move much more quickly.”

He also said that, even though the enlarged company would have a market capitalisation of about 40m, it is still a relatively small company. “We'd rather be leading players on AIM and have a bit more flexibility.”

Through the placing, the company gained a number of major institutional investors, compensating for those which had bailed when GiroVend recovered after a major decline in its price, according to McGrane. “This isn't just a dotcom scam, we're trying to build something of lasting value here and it's given me great confidence that we've been backed by such high standard investors.”

McGrane said that they fully intend to go back to the market next year for further funding: “I hope that it will be with a strong share price on the basis of what we've achieved this year.”