House of Control Group AS: Contemplated private placement and listing on Merkur Market

by House of Control | Oct 5, 2020 8:00:00 AM

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN, HONG KONG OR THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

House of Control Group AS: Contemplated private placement and listing on Merkur Market

Oslo, 5 October 2020. House of Control (“House of Control” or the “Company”) has engaged ABG Sundal Collier ASA and Pareto Securities AS (together the “Managers”) to advise on and effect a contemplated private placement of up to NOK 650 million in new and existing shares in the Company (the “Private Placement”). The Private Placement will comprise an offer of new shares raising gross proceeds to the Company of NOK 350 million (the “Primary Offering”) and a sale of existing shares of up to NOK 300 million from a consortium of the selling shareholders in the Company (the “Secondary Offering”).

House of Control has seen an annual growth in Annual Recurring Revenue (ARR) of 33 per cent since 2016 from sales of cloud-based software for CFOs. The solutions give the clients overview of legal and financial details and liabilities on contracts and assets.

The net proceeds from the Primary Offering will be used to fund the Company’s inorganic growth opportunities.

“We continue to have very high ambition for organic growth for many years going forward. Effects from acquisitions will come on top of this. We have built a proactive and highly scalable sales organization, and through acquisitions, we will have an even broader product range. We are convinced this will both increase our reach to new customers and boost upsell among existing customers,” CEO of House of Control Lasse Sten says.

Lasse Sten 3

The price per share in the Private Placement has been set to NOK 21.00, equivalent to a pre-money equity value of the Company of NOK 845m based on the 40,248,200 shares currently outstanding in the Company. Five cornerstone investors, have, subject to certain terms and conditions, undertaken to subscribe for and be allocated shares for NOK 325 million as follows: (i) Luxor Capital Group has undertaken to subscribe for and be allocated shares for NOK 150 million; (ii) Berenberg Bank has undertaken to subscribe for and be allocated shares for NOK 50 million; (iii) Consensus Asset Management has undertaken to subscribe for and be allocated shares for NOK 50 million; (iv) Handelsbanken Fonder has undertaken to subscribe for and be allocated shares for NOK 50 million; and (v) DNB Asset Management has undertaken to subscribe for and be allocated shares for NOK 25 million.

The bookbuilding period in the Private Placement will commence today, 5 October 2020 at 09:00 CEST and close on 6 October 2020 at 16:30 CEST. The Managers and the Company may, however, at any time resolve to close or extend the bookbuilding period. If the bookbuilding period is shortened or extended, any other dates referred to herein may be amended accordingly.

House of Control has applied for, and will, subject to successful completion of the Private Placement and the necessary approvals from the Oslo Stock Exchange, list the shares of the Company on Merkur Market (the “Listing”). The first day of trading on Merkur Market is expected to be on or about the 20 October 2020.

The Private Placement will be directed towards Norwegian and international investors, in each case subject to an exemption being available from offer prospectus requirements and any other filing or registration requirements in the applicable jurisdictions and subject to other selling restrictions. The minimum application and allocation amount have been set to the NOK equivalent of EUR 100,000. The Company may, however, at its sole discretion, allocate an amount below EUR 100,000 to the extent applicable exemptions from the prospectus requirement pursuant to the Norwegian Securities Trading Act and ancillary regulations are available.

Completion of the Private Placement is subject to: (i) corporate resolutions of the Company required to implement the share split and issue the New Shares, including the Company’s board of directors’ resolution to proceed with the Private Placement and the EGM's resolution to issue the New Shares, (ii) registration in the Norwegian Register of Business Enterprises of the share capital increase pertaining to the New Shares, and (iii) the shareholders' agreement among the shareholders of the Company being terminated with effect from the completion of the share capital increase pertaining to the New Shares.

The Company reserves the right, at any time and for any reason, to cancel, and/or modify the terms of, the Private Placement. Neither the Company nor the Managers will be liable for any losses incurred by applicants if the Private Placement is cancelled, irrespective of the reason for such cancellation.

House of Control in brief:

House of Control develops and sells software as a service ("SaaS") solutions. The main product is Complete Control, which is used for managing contracts and assets, including the contracts' financial implications for budgeting and reporting. Complete Control has several modules and add-ons, including compliance with IFRS 16 (Financial Leases) requirements, HR management, digital signature and price index adjustments. The customer value proposition includes cost cutting, time saving, business risk reduction and key personnel dependency. The Group has recently expanded its product scope and proven its inorganic growth capabilities through the acquisition of dinERP AS. The Group has mainly subscription-based revenue model with over ~90% of the revenue being recurring. Non-recurring revenue is related to initialization fees incurred for both new sales and upselling.

Company highlights:

  • Best of breed commercial value management software allowing CFOs to have better overview of revenues and obligations:
  • Niche software offering with an addressable market NOK 8.9bn and no direct competitors
  • Proven recurring revenue model with NOK 132m ARR as of Aug-20 and 33% organic ARR growth p.a. from 2016 to 2019
  • Strong SaaS Metrics with +95% gross margins and +90% share of recurring revenue
  • Positioned for further organic and non-organic growth - identified and initiated contact with several potential M&A targets throughout Europe.

Advisors:

ABG Sundal Collier ASA and Pareto Securities AS are engaged as financial advisors to the Company and as Joint Lead Managers and Joint Bookrunners in connection with the Private Placement and Listing. Advokatfirmaet CLP DA is acting as legal advisor to House of Control, while Advokatfirmaet Thommessen AS is acting as legal advisor to the Managers. Corporate Communications AS is acting as communication advisor to the Company.

For more information, please contact:

Lasse Sten, Chief Executive Officer, phone +47 91 88 21 25

Carl Fabian Flaaten, Chief Financial Officer, phone + 47 90 04 31 84

Important notice:

This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures.

The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and accordingly may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States. Any sale in the United States of the securities mentioned in this announcement will be made solely to "qualified institutional buyers" as defined in Rule 144A under the Securities Act.

In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State. The expression "Prospectus Regulation" means Regulation (EU) 2017/1129 as amended (together with any applicable implementing measures in any Member State.

This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only for relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "strategy", "intends", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict, and are beyond their control. Actual events may differ significantly from any anticipated development due to a number of factors, including without limitation, changes in public sector investment levels, changes in the general economic, political and market conditions in the markets in which the Company operates, the Company's ability to attract, retain and motivate qualified personnel, changes in the Company's ability to engage in commercially acceptable acquisitions and strategic investments, and changes in laws and regulation and the potential impact of legal proceedings and actions. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not make any guarantee that the assumptions underlying the forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. You should not place undue reliance on the forward-looking statements in this announcement.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

Neither the Managers nor any of their affiliates makes any representation as to the accuracy or completeness of this announcement and none of them accepts any responsibility for the contents of this announcement or any matters referred to herein.

This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities of the Company. Neither the Managers nor any of its affiliates accepts any liability arising from the use of this announcement.

The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.

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