A Fantastic Investment for your Milford Active Growth Fund and KiwiSaver Active Growth Fund Update

The recent announcement that Vend would be sold to Canadian-based, and NYSE-listed, Lightspeed POS Inc marks another successful private investment for the Milford Active Growth Fund and the Milford KiwiSaver Active Growth Fund. Vend delivers a point of sale (POS) software solution, via the cloud, to small and medium sized retailers around the globe.

The Active Growth Funds first invested in Vend in 2013 and also participated in capital raisings during 2014 and 2015, ultimately investing a total of $5.5 million in the company. With gross proceeds (including shares to be issued from the acquirer) of close to $26.2 million from the recently announced sale, the net gain for Active Growth Fund  and KiwiSaver Active Growth Fund investors will be approximately $20.7 million.

During our investment, Vend added over 300 staff members, with a significant portion in New Zealand. The sale of our Vend shareholding (pending final regulatory approvals) follows closely after the sale of our interest in Unleashed Software, another successful Active Growth Fund private investment. These results clearly demonstrate the long-term value creation for both investors and the New Zealand economy that can be achieved through investing in private growth companies.

The Active Growth Fund and KiwiSaver Active Growth Fund have been investing in private, growth businesses in New Zealand since 2010. The strategy has sought to find quality management teams and businesses, and to provide fresh capital to enable these businesses to increase scale by hiring more staff, investing in working capital and accelerating growth.

Milford was initially attracted to Vend’s experienced management team and board, who had previously built and sold software businesses. At the time the movement to cloud computing was new and relatively undiscovered. Xero was the obvious poster child at that time, but a closer look at the industry showed there was a burgeoning new segment of the technology sector that was poised for explosive growth over the coming years. Vend had identified a useful niche that would enable specialised software to be sold at a price that was three-to-four times what Xero charged per month.

Tracking our valuation of Vend’s share price, over the period of our involvement, demonstrates that this type of private investing takes time, patience, and a significant amount of effort. Growth businesses don’t always go in a straight line and unlisted investment prices don’t move on the whim of listed markets. The business performed very well initially, but had a few years of relatively lack lustre growth, after which the business really started to accelerate again through 2018 and 2019. Unfortunately, Vend’s customers were hard hit by COVID-19 lockdowns through 2020 but, in similar fashion to other companies in the technology sector, Vend saw its customers survive and return later in the year.

The sale of Vend to a large international player is a testament to the strong state of our technology sector in New Zealand and proves, once again, our capability in competing on the global stage.

At Milford, we have enjoyed being along for the journey with Vend and are proud to have delivered a strong result for investors. We look forward to developing partnerships with other private companies and helping them achieve their growth ambitions.