Thus, when Hosking joined then fast rising Australian PC vendor Ipex as a minority partner in 1987, he saw it as a ticket to achieving his dreams. Hosking believed that an agreement, which ostensibly gave him a five per cent stake in Ipex, would at some stage lead to a big pay day when the company was sold or listed on the stock exchange.
Personal differences between Hosking and the Ipex board, however, caused him to depart the company in 1996, and initiate an eight year legal battle. The problem for Hosking was that he believed that his agreement with Ipex entitled him to a payout on leaving the company equal to five per cent of its deemed value. The problem for Ipex and its founding CEO and majority shareholder, Joel Schwalb, was that they believed Hosking was entitled to nothing.
The ensuing law suit went all the way up to the High Court before a favourable judgement for Hosking was finally handed down in the Supreme Court of Victoria in late August this year. The Court deemed that Hosking's 5 per cent stake in Ipex was worth $1.54 million. Hosking's payout therefore valued Ipex at just under $31 million. However, six months prior to the judgement being handed down, Ipex was sold to listed IT services provider, Volante Group, for $70 million and Ipex had more than $28 million of undistributed profits in the bank . Thus, the real market value of Ipex was somewhere closer to $100 million, which would make Hosking's five per cent stake worth about $5 million. Surprisingly, however, the court did not see the sale as a relevant event in determining the value of the company. Hosking, who has spent a considerable sum on legal fees over the past eight years, is undoubtedly not a very happy IT entrepreneur at the moment and is considering his legal options.
Meanwhile, as a result of what was effectively a reverse takeover of Volante by Ipex, Schwalb's family company, Takapuna Investments, has a 46.8 per cent stake of Volante, worth approximately $82.6 million. Even more importantly, however, Schwalb, has effectively gained control of a publicly listed IT company which last year had revenues of nearly $350 million and profits of close to $8 million. Volante's CEO, Allan Brackin, who is a five per cent shareholder, announced his resignation from the company in July and the company is searching for a replacement. Schwalb hasn't quite achieved his stated goal of heading Australia's first $500 million IT company but he appears to be on his way. Finally, we wouldn't be in the least surprised if Volante undergoes a name change sometime soon - Ipex Limited has a nice ring to it.