Two weeks ago, Standout’s portfolio company Exsitec completed an initial public offering (IPO) at Nasdaq First North Growth Market in Stockholm. The IPO was strongly oversubscribed after receiving much positive attention in various media. Total size of the offering was SEK 70 million with 75% being new shares sold by the company and 25% shares sold by Standout. This is the first IPO of a Standout portfolio company and we are excited about the positive reception in the market. So what is the reasoning behind the IPO?
Klas Hillström, Standout Capital: Our job is to make investments in high quality companies, help them become even better and eventually realise our investments via an exit. As a majority owner of Exsitec we essentially had two main ways of realising our investment. One alternative is to sell the whole company to an industry player or another private equity company. The other is an IPO and then selling our shares over time. We believe that what’s best for the company is also best for the owners in terms of valuation. In this case, we strongly believed that the IPO was the way forward for both the company and the owners.
For how long have you been investors in Exsitec?
Klas: We have been majority owners for three years and have been impressed from the start with the strength of Exsitec’s business model and the quality of its management. The company has been able to more than double in size over the last three years with strong profitability throughout the period. High organic growth has been complemented with four acquisitions during our ownership period. The relatively high share of recurring revenue is another example of what we think is high and unique quality in Exsitec. We are also happy that the market seems to appreciate these qualities, looking at the strong debut on the stock exchange.
And what are your thoughts on future growth?
Klas: We believe that Exsitec has the ability to maintain a high growth rate and become even stronger as a publicly listed company. The listing will also be beneficial for the brand, not least when it comes to the key area of recruitment. Exsitec’s main way of growing is by recruiting students directly out of university to its popular trainee program. The IPO makes it possible for Exsitec’s employees to become shareholders.
What’s Standout’s role as owners now after the IPO?
Klas: Standout only sold 10% of its shares in the IPO which should be viewed as a testament to our strong belief in the company and its future. With a great CEO and management team, Exsitec is well prepared for the stock market. This is the start of the next phase in Exsitec’s growth journey!
Now that you are listed, what are your views on this next phase for the company?
Johan Kallblad, Exsitec’s CEO: We have a business model where we grow the value of our existing customer base year over year by expanding our offering and functional footprint in a pace that is right for the customer. We have seen that we can speed up our growth by doing selective M&A activities in order to reach a wider customer base faster.
What benefits do you see in being a listed company?
Johan: Access to the financial market and also having a real market price of our shares will be beneficial for us in being an attractive acquisition partner. We are also excited to expose ourselves to the transparency needed for a public company. We truly believe that we have built a great business and we want as many people as possible to notice us and have the opportunity to be a part of our story going forward.