Advanced Logistics Development (ALD), listed on the Tel Aviv Stock Exchange (TASE) at a NIS 21 million market cap, is preparing an offering for its ALD Software subsidiary on the Australian Securities Exchange (ASX) at a valuation of $10 million (NIS 36 million). ALD holds 87.4% of ALD Software. The parent company yesterday reported that it was in "initial and preliminary stages of the securities offering process on the ASX."
The plan is to hold the offering in two stages, as permitted by the ASX in many cases. In the first stage, ALD Software will raise $1.6 million at a valuation of $10 million in a process called a "pre-IPO." In the second stage, which is held up to 18 months after the pre-IPO, ALD Software will raise $4-6 million. The pre-IPO stage allows companies to raise fairly small amounts that enable them to continue growing and improve their chances in an IPO. Investors in a pre-IPO usually get a better price because of the risk.
According to the report, ALD Software has hired a local broker in Australia to help it with the process, and is already in initial talks with a potential investor about investment in the pre-IPO.
ALD Software describes its mission as "providing software for in-depth failure analysis to achieve Safety, Reliability, Availability, Quality and Maintainability goals." Its products are used in decision-making processes in management of and quality assurance for equipment, systems and processes. In its reports for 2018, ADL stated that it was considering a number of options for a private placement and/or a public offering, and given the opportunity, also for ALD Software, including a possible offering on a foreign stock exchange, including ASX.
ALD's reports also say, "Despite a degree of stabilization in ALD Software's cash needs, the company is nevertheless constantly considering options for raising additional money to pay for the current business operations and cash needs."
ALD added that ALD Software was consuming monetary and management resources from the group, because it also engaged in development. "Although the company's business situation improved, if ALD Software does not maintain profitability and/or raise money, its business activity is liable to suffer damage, and even affect the results of the entire group," the report states.
Difficulty in making sizeable profits
ALD has activity in four sectors: engineering and management consultant services; software products; training and certification in quality, safety, reliability, and training for the IDF; and software testing and outsourcing. The company's CEO and controlling shareholder is Dr. Zigmund Bluvband.
ALD's share price has climbed 35% this year, in line with the trend of most small companies on the TASE, on small turnovers usually ranging from a few thousand shekels to a tens of thousands of shekels. The share price has dropped 20% in the past three months, and is now 80% below the peak it reached in July 2007, when the company's market cap neared NIS 80 million.
Bluvband owns 36% of the company, a stake worth NIS 8 million. Psagot Investment House holds 9%, and Ayalon 7%.
The company made headlines in April 2014 after reporting that it had won a contract to maintain aircraft for a European customer for €40-45 million over five years. The share price zoomed 54%, but has since lost 60% of its value.