Virtual Spectator investor sells majority stake to overseas owner

By PETER GRIFFIN IT editor



It was always seen as the innovative Kiwi start-up able to foot it on the international stage, but ownership of Virtual Spectator has moved overseas with the sale of a 60 per cent stake to a Bermudan investment company.

Wellington-based venture capitalist Endeavour Capital has offloaded its remaining shares in a "multi-million-dollar" deal to Investors Guaranty companies, which early last year paid around $3 million for a 40 per cent stake in Virtual Spectator.

For Endeavour boss Neville Jordan, the exit from Virtual Spectator is likely to have been lucrative. He moved to buy the ailing company in May last year for an undisclosed figure, believed to be less than $1 million.

Last year Endeavour snapped up Australian graphics company Pineapplehead for $700,000. It is also included in the acquisition.

Jordan was coy on Endeavour's return on investment. "It's worked out very well for everyone concerned," he said.

Investors Guaranty claims it will keep Virtual Spectator's software development in New Zealand. Jordan said it would be foolish to do otherwise. "The team in New Zealand is outstanding, no one would want to disrupt that."

But with the New Zealand shareholding gone, so has control and the incentive to stay put. Two IT companies - NetIQ, which bought Marshal Software in 2002 for $5 million and Bulletin Wireless - have recently decided to move development to the US.

With an international investment network, Investors Guaranty will now take a crack at making Virtual Spectator the global success its founders envisaged.

Virtual Spectator had intended to tap the unlisted securities market last year to raise $1 million, but was then courted by Investors Guaranty.

"It gave us a launch much quicker and allowed us to do more research and development than we'd budgeted for," said Jordan, who would inject the proceeds from the sale into Endeavour's investment fund, worth $40 million,

Despite legal stoushes with former Virtual Spectator executives, he was happy with the company's progress.

"When we bought the assets over two years ago it had run out of cash and had no orders on the books. We turned it right around."

Since then, Virtual Spectator had launched a major new yachting product, bought Pineapplehead, won contracts with the BBC and won a Royal Television Society award for sports innovation.

"Just over the weekend we did the Grand National steeplechase for the BBC," said Jordan.

The sale would not spell the end of legal action between Virtual Spectator and Virtual Spectator founder Craig Meek's company iVistra, said Jordan.

Endeavour would look to co-invest with Investors Guaranty in future. The Bermuda company has half a dozen investments here - mainly technology focused - including stakes in software companies RHE and Idiom.