Deals - Asia

Payment firm Tyro to brave Australia's tough IPO market before Christmas: sources

SYDNEY (Reuters) - Australia’s Tyro Payments is preparing to list in December and is seeking a valuation of more than A$1.5 billion ($1 billion), two people said, braving negative market sentiment following six initial public offering (IPO) cancellations this month.

The firm, which sells EFTPOS machines and payment services via a digital apps to businesses, plans to file a prospectus in mid-November and sell shares worth about A$250 million as part of the listing process in mid-December, one of the people said.

A Tyro representative did not return calls seeking comment. The sources, who have direct knowledge of the matter, declined to be identified as they were not allowed to talk to media.

Tyro’s plan comes even as six listings have been aborted this month alone, highlighting a tough Australian IPO market as investors demand lower prices to protect against the possibility of post-float losses.

However, unlike most of the recent canceled listings, such as online realty company PropertyGuru and Australian franchise network Retail Zoo, Tyro is not majority owned by private-equity firms, which investors see as a positive.

Fund managers have been told that Tyro's owners, including co-founder of Atlassian Corp TEAM.O Mike Cannon-Brookes who owns about 15% of Tyro, want to value the firm at 6.25-7.75 times its expected 2020 revenue, the second person added.

That is equivalent to A$1.5 billion-A$1.86 billion based on Tyro’s expected 2020 revenue of A$240 million, which would be 27% higher than in 2019, according to an investor presentation seen by Reuters.

Tyro has delivered a compound annual growth rate of 29% in revenue and gross profits since 2014, the presentation shows.

Its gross profit is expected to grow about 20% in fiscal 2020 to A$100 million.

Sydney-based Tyro competes with payments companies such as San Francisco based Square Inc. SQ.N.

Reporting by Paulina Duran in Sydney; Editing by Himani Sarkar