Indranet finishes short of target

By PETER GRIFFIN technology writer

Christchurch-based IT company Indranet has completed its latest round of capital raising but has fallen short of the $5 million target it needed to develop its network communication technology which the company claims will "change the way the world communicates."

Indranet raised $4.125 million in its second public offering, around $3 million of which is believed to have come from new investors.

The offering increases the number of Indranet shares on issue to around 194.5 million and the number of shareholders to 2777.

The $1 issue price this time around compares to an adjusted price of 84c, set in December after the company undertook a five-for-one share split.

Like its initial public offering, the company went to the market without the support of brokers and underwriters, using extensive advertising to drum up investor support.

Dr Louis Arnoux, co-founder and managing director of Christchurch-based Indranet, refused last night to comment on the outcome of the public offering or why the company had made the decision to go to the market alone.

But one market analyst approached by the Business Herald said Indranet had not followed traditional capital raising avenues because the company had been unsuccessful in convincing brokers of its commercial viability.

Dr Arnoux has said that the $5 million target for the second primary offering was only 20 per cent of what the company needed to commercialise its technology over the next five years.

Commercial activities were expected to generate the remainder of the capital required.

Indranet's failure so far to report any commercial income has raised questions in the financial community about how long the company can hold on to its technology before it becomes obsolete.

Indranet is taking part in the European Commission's "Virtuhalls" scheme, aimed at providing local and regional authorities with cost-effective ways of implementing e-administration systems.

Indranet will contribute a "4G" wireless telecommunications network in return for $2.14 million over three years from Virtuhalls' partner, Sigma Technologies.