Xero raises capital, acquires Max Solutions

Peter Dinham
Friday, 03 February 2012 02:44

IT Industry - Listed Tech

New Zealand-listed accounting software vendor, Xero, has raised a further $15.5 million from existing strategic investors in the company to support its future growth in Australia and globally, at the same time as it announced the acquisition of practice management company, Max Solutions, the developer of job, time and invoice management solution WorkflowMax.

Chris Ridd, Managing Director Xero Australia, said the capital raising and acquisition of Max Solutions supported  Xero's rapid growth in Australia and the rest of the world.' 'We continue to transform the accounting industry by helping them embrace the cloud. Many of our customers are WorkflowMax customers so this together with Paycycle gives us a very powerful combination.'

In the acquisition worth $4.6 million, Ridd said Max Solutions would help Xero provide a full suite of online tools to accountants enabling them to run a 'modern practice' without the need for expensive in-house servers.

Ridd said Max Solutions founders, Gavin George and Chris Spence, would become part of the Xero team and bring all other Max Solutions staff to the company.

According to Ridd, the capital raised will be used to grow the business in the Australian, UK and USA markets where he said the company is was gaining market share against the large incumbent providers. Xero now employs 170 staff across four countries and recently set up an office in the US.

Ridd also said that that additional funds had been raised to support Xero's global growth from strategic investors including Sam Morgan, independent Xero director board member of Fairfax Media, Craig Winkler, the former co-founder of MYOB, and Valar Ventures, the New Zealand investment vehicle of US-based Peter Thiel, a former co-founder of Paypal and one of the first external investors in Facebook.

The Xero Board has also announced a shareholder purchase plan (SPP) that provides existing New Zealand-based shareholders the opportunity to acquire new Xero shares under the same terms as the strategic investors.

In disclosing further financial details, Zero reports that revenue in Australia rose to $1.4 million for the six months to 30 September 2011 making it the group's fastest growing region, and reflecting a 260 per cent increase on the same period in 2010.

Globally, Xero expects its operating revenue for the full year ended 31 March 2012 to double 2011 revenue of $7.2 million.