Emblaze Group controlling shareholder and CEO Eli Reifman has drawn considerable criticism in recent years, as a result of the heavy losses accumulated by his company. But he has shown an impressive ability to raise money on the capital market, even under difficult conditions.
Emblaze subsidiary Orca Interactive raised a gross £14 million ($25 million) at a company value of £35 million ($63 million) before the Succot holiday began. Orca issued 14.4 million shares to a group of British institutions at £0.99 per share. On October 13, the share will be listed on the London Stock Exchange’s Alternative Investment Market (AIM), under the symbol ORCA LN. British investment house Altium Capital underwrote the issue.
Emblaze floated Orca at double the value at which it bought the company four years ago. Emblaze acquired Orca, founded in 1995, in April 2000 for $33 million in shares. It cannot be ruled out that the strong financial backing that Orca obtained from Emblaze’s ample cash reserves was one of the main factors in its growth. At the time of the acquisition it was considered a start-up. Orca provides software solutions that enable landline telephony and cable companies to provide broadband interactive television broadcasts.
The issue diluted Emblaze’s 99.7% stake in Orca to 59.7%. In addition to Emblaze, four institutions now hold over 3% of Orca: the Scottish Widows Investment Partnership holds 8.2%, J O Hambro Capital Management holds 4.7%, Henderson Investors holds 4.3%, and USS Ltd. also holds 4.3%.
Orca CEO Haggei Barel said in the company announcement, “We were glad to get positive responses in the issue from the participating investment institutions. The money we raised will enable us to improve our standing in our markets, and take advantage of the many opportunities available to us.”
Orca believes that the issue will boost its credibility with its customers. The company hopes that its business partners will provide it with a solid base for better absorption of its products. Orca also hopes that the capital raising round will provide it with the balance sheet strength and financial flexibility its needs to grow, both internally and externally, through selective company acquisitions.”
”Globes”: Why did you hold your issue on the AIM, and not on the London Stock Exchange?
Barel: ”The LSE, London’s main stock exchange, is usually used for much larger issues than ours. The process of issuing on the AIM is less complex than on the LSE. Quite frequently, an IPO on the AIM serves as a convenient springboard for a later LSE issue.
"Today, Orca and its board of directors have only one goal: to become number one in the company’s only market. A focus like that gives both our customers and our business partners confidence.”
Do you have potential acquisitions in mind, now that you’ve raised money?
”We don’t have anything specific right now. We have several interesting options on the table, but nothing in the advanced stages of due diligence or anything like that. If we make acquisitions, they won’t be of technology that will contribute to us in another few years. They will be of companies that will contribute to our business in the short term.”
Published by Globes [online] - www.globes.co.il - on October 10, 2004