While we struggle to bring UK tech firms to the public markets, there seems to be a far greater appetite for such IPOs in Brazil. In the past few weeks, two indigenous software firms have launched on Brazilian market Bovespa; retail sector ERP firm (and General Atlantic-backed) Linx; and financial services specialist, Senior Solution. Linx turned over R$231m (c. £80m) in 2012 with a 28% adjusted EBITDA margin. Much smaller Senior Solution has yet to announce FY results, but reported revenues of R$35m (c. £12m) for the first 9 months of the year at a 21% adjusted EBITDA margin. Linx and Senior Solution are minnows compared to Brazilian home-grown ERP market leader Totvs (‘v’ pronounced as ‘u’), which turned over Rs1.4bn last year (see Totvs bounds ahead – within bounds).
Linx raised Rs528m on its IPO (8th Feb), representing 2.3x historic revenues and 8.2x EBITDA. Its shares closed last week 16% up on the Rs27 launch price. Senior Solution had to lower its R$13.50-R$15.50 target price, eventually launching last Friday at Rs11.50. The Rs62m raised valued the company at 1.3x its annualised revenue run rate, and between 8-9x annualised EBITDA. The most recent UK software IPO was that of WANdisco last June (see WANdisco steps out onto the AIM dance floor). WANdisco was valued at £37m at its launch, which showed a lot of faith in a loss-making company turning over less than £4m. That faith has so far rewarded investors with a share price nearly five times higher than its 180p debut. The weather may be warmer in Brazil, but investor sentiment seems hotter over here!