FreeAgent to apply for AIM listing

FreeAgent, a provider of cloud-based Software-as-a-Service (SaaS) accounting software solutions and mobile applications, announced its intention to apply for the admission of its share capital to trading on AIM and to conduct a placing of new ordinary shares with institutional investors.

The group’s services are designed specifically for UK micro-businesses and their accountants. Microbusinesses account for 95% of UK’s 5.5m businesses, represeting 32% of total private sector employment and 18% of private sector turnover.

The board believe the total addressable market for micro-busienss financial management software to be worth nearly £500m annually.

The company is seeking to raise funds through this initial public offering (IPO) to accelerate product development with a focus on the digital tax agenda, to scale-up customer acquisition with a particular emphasis on large accountancy practice customers and to repay existing debt.

The company has developed significant intellectual property (IP) around its platform that streamlines financial management brinigng together invoice and expense management to VAT and payroll.

The SaaS solution currently has 52,000 subscribers, up from 32,000 in July 2013.

The group has a “strong” record of revenue growth at 34% in the two years from 31 march 2014 and 31 march 2016, with 100% recurring revenues.

Annualised committed monthly recurring revenue (ACMRR), which is committed revenue to be added in the next 12 months in accordane with contracts agreed with accountancy practice customers, grew to £7.7m at 30 September 2016. The gross profit margin stands at over 80%.

Dealings in the company´s shares on AIM are expected to start in November 2016.