Communication technology company Savox Communications is planning to list on the main list of the Helsinki Stock Exchange.
Savox’s CEO Jerry Kettunen told Kauppalehti that the company’s goal is to go public in the near future.
“We are a critical communications systems company. Our customers include defense sector operators, security sector operators, and certain industrial customers,” Kettunen describes.
IPO pages:
The planned initial public offering and share sale are expected to consist of a share issue by the company of approximately EUR 30 million (gross proceeds) and a share sale by Savox’s largest shareholder, Savox S.A., which is a company controlled by the Chairman of the Board, Paul Ehrnrooth.
Danske Invest Finnish Equity Fund, DNB Asset Management, Elo Mutual Pension Insurance Company, Protean Funds Scandinavia, and Tesi (Finnish Industry Investment Ltd) have each separately committed to subscribe for shares in the company for a total of approximately EUR 26 million in the planned IPO and share sale under certain conditions and provided that the valuation of the company’s entire share capital before the proceeds from the share issue is no more than EUR 160 million.
The goal of the IPO and share sale is to support the implementation of Savox’s long-term business strategy and strategic objectives. The proceeds from the listing would strengthen the company’s balance sheet and financial flexibility, enabling the execution of its growth strategy. A stronger balance sheet would particularly support working capital management, the financing of customer and program projects, and long-term research and development investments, allowing for even greater financial maneuverability and flexibility in financing solutions. The listing would also allow Savox access to capital markets and the expansion of its ownership base among both domestic and international investors, which would increase share liquidity. In addition, the IPO and share sale are expected to benefit Savox operationally, improve Savox’s brand awareness among its customers, potential future employees, and investors, as well as other stakeholders, thereby strengthening the company’s competitiveness and supporting long-term value creation. The listing and increased liquidity would also enable the more efficient use of shares as consideration in potential acquisitions and in personnel incentive schemes.
In my opinion, Savox is the Fiskars of critical communication devices.
Based on my own experiences, Savox products are of very high quality. Seamless communication in critical and hectic environments is practically essential for achieving a good outcome. The demand for this type of equipment is certainly not going to decrease in the future.
Savox could hardly have planned a better time for an IPO, as the defense sector is under such intense hype, which will surely provide some kind of extra boost. However, the defense industry is a very challenging field, but if you manage to gain a foothold and prove yourself trustworthy, the end result can be very favorable.
Just a quick heads-up: Savox will be holding a presentation event tomorrow starting at 6:00 PM at Miltton’s premises. Before the main event, there will be an opportunity to get to know the company’s products while networking. If you can’t make it in person, you can follow the company presentation itself via webcast.
The subscription period begins tomorrow. The share price is 10.72 euros, and the emphasis is on the institutional side.
“In the Public Offering, a preliminary maximum of 233,208 Offering Shares are being offered to private individuals and entities in Finland. In the Institutional Offering, a preliminary maximum of 4,429,430 Offering Shares are being offered to institutional investors through private placements in Finland and, in accordance with applicable laws, internationally outside the United States. Depending on demand, the Company and the Main Owner may, without restriction, transfer Offering Shares between the Public Offering and the Institutional Offering, deviating from the preliminary number of shares.”
What are your thoughts on the company? I’m personally interested, so I’ll have to read the prospectus once it’s approved and available
Based on the intensity of the discussion, the investing public seems surprisingly indifferent toward Savox, even though its profile would typically be expected to generate significant excitement. Alternatively, there might be hidden interest, and the (very) small public offering could be quickly oversubscribed.
The valuation doesn’t provoke strong dislike; rather, it prompts positive nodding if one believes in the sustainability of the numbers. The company has roughly as much net debt as the proceeds expected from the offering, so the EV (Enterprise Value) would land around the 200 million mark. Guidance for the current year is 65-75 million in revenue and a 14-18% adjusted EBIT margin. Assuming the midpoint for both, the valuation would be around 17-18x EBIT for this year. There is an order book in place, so in 그 respect, it seems very realistic. If growth continues even somewhat similarly, the price isn’t bad at all. The company’s targets for 2030 are outright bold, with average annual revenue growth exceeding 20% and an EBIT margin also over 20% in that year. If we take the ended year 2025 as the starting point for calculations, revenue was 56.1 million; thus, at the lower end of the target, 2030 revenue would be 140 million, and at the lower end of the EBIT margin target, EBIT would be 28 million. With that level of performance, the company would offer truly delicious returns, but there is certainly a lot to prove. It remains to be seen how the situation develops.
I’m not sure, but I suspect I’ve been using Savox products for a long time in my work at the rescue services. I also have one negative user experience regarding this. I suffered hearing damage during normal duty when a helmet radio emitted a loud interference noise directly into my ear through the earpiece during a call. This is just an isolated incident and I don’t know of anything similar happening to others. These likely don’t happen anymore and the products are surely top-tier nowadays. Of course, I didn’t receive any compensation for this occupational accident.
Based on a quick Google search, the industry appears to be highly competitive with a large number of manufacturers. Based on that, the projected growth figures and margins seem questionable.
Sijoittaja.fi has also written about Savox; nothing particularly groundbreaking, and the rest of the article is behind a paywall.
Savox’s net debt at the end of March was 40.7 million euros, of which 10.8 million euros were capital loans. Net debt adjusted for capital loans was 29.8 million euros, and its ratio to the rolling 12-month comparable EBITDA was 2.7x. The adjusted equity ratio was 33 percent. Thus, there is a fair amount of debt, but the share issue strengthens the balance sheet. Reducing indebtedness and financing working capital are at the core of the justification for the issue. A significant amount of working capital is tied up, as adjusted net working capital was 25.4 million euros, which is typical for a growing project-oriented equipment manufacturer.
