Orion shares priced at top of range

Orion chairman Andrew Ferrier. Photo / Jason Oxenham

Shares in software developer Orion Health have been priced at $5.70 -- the top of the indicative range -- meaning the Auckland-based company will be valued at close to $1 billion when it floats on the NZX and Australia's ASX on November 26.

The company said the offer size had been set at $125 million, $120 million of which would be new capital that will be used to fund growth including an expansion of its research and development capacity.

Orion, which is poised to make a big push into exports markets including the United States, provided an indicative price range for its initial public offer (IPO) of $4.30 to $5.70 in its prospectus, which was registered last week.

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The $5.70 final offer price, which was set through a bookbuild with institutional investors yesterday, will give Orion a market capitalisation of around $915 million upon listing.

A source said yesterday that demand from institutions had been so high that retail investors may only end up with around 10 per cent of the shares they had initially hoped for.

Last week Orion said it would raise between $120 million and $155 million through the offer.

"The board has held the view that $120 million of new capital is the right amount for the business and it was a tough decision not to increase the size of the offer in the face of such overwhelming demand at the top of the price range," said chairman Andrew Ferrier today. "We look forward to welcoming over 20 domestic and offshore institutions, and New Zealand retail investors as shareholders in Orion Health. We are excited about sharing with them what we believe is the single largest opportunity in Orion Health's history as we look to capitalise on the transformation of the healthcare industry through the health data revolution."

An entity associated with Orion chief executive and founder Ian McCrae will sell $5 million worth of shares into the offer. No other existing shareholders are selling stock.

McCrae is expected to retain a roughly 50 per cent shareholding in the firm following the float.

Orion's technology facilitates the sharing of information between hospital departments, healthcare providers and health professionals.

Founded in 1993, it now has more than 450 customers in 25 countries and posted total revenue of $153 million in its last financial year.

The company reported a loss of $14.8 million in the six months to September 30, according to its prospectus, which did not include any earnings forecasts because the company decided its "lumpy" revenue made providing accurate guidance too difficult.

Deutsche Craigs and First NZ Capital are joint lead managers for the offer, which doesn't have a public pool.

Read Orion's media release here: