New dawn breaks at 6PM
September 25 will be a defining moment for Ivan Bartolo - and not because it is his 42nd birthday. It is the day 30 per cent of the shares in 6PM Holdings plc, an IT company owned equally by himself and his two partners Alan West-Robinson and Stephen...
September 25 will be a defining moment for Ivan Bartolo - and not because it is his 42nd birthday. It is the day 30 per cent of the shares in 6PM Holdings plc, an IT company owned equally by himself and his two partners Alan West-Robinson and Stephen Wightman, are traded for the first time on the Malta Stock Exchange. The prospectus was recently approved by the Malta Financial Services Authority. The shares will be issued on September 17 for listing a week later. A first for the local market is that the shares are denominated in sterling and will thus provide an opportunity for Maltese investors to place part of their sterling balances in a locally listed equity.
6PM Holdings plc was set up last May, to act as the parent company of two operating companies - 6PM Ltd which was set up in 2001 and 6PM Management Consultancy (UK) Ltd which commenced operating in 2004. The company will issue 2,250,000 shares at £0.67 each. At this price, the company is being valued in excess of five million.
This offer will not be aimed at the retail market but will be an intermediaries' offer: Brokers will market it directly among their clients. "The offer is aimed at experienced investors so don't expect to see big adverts everywhere," Mr Bartolo warned.
The company had a turnover of 6.5 million in 2006 with a similar amount forecast for this year. "The shares are being sold at a price which takes into account the fact that we are not offering a controlling interest," he said. "British companies that are valued at between four million and 20 million usually trade for a price to earnings ratio of 9.26. We are selling at a ratio of 8.6. This is not an aggressive rating when seen against the forecast rate of growth.
"When it came to pricing, we took the advice of our stockbroker Wilfred Mallia who argued it is better to start our Stock Exchange adventure on a modest valuation. He insisted we should not aim at premium prices. This is not easy for company owners who have grand dreams!" he smiled.
"However, our broker has assured us that once we deliver on the promises made in the prospectus, the market will reward us."
One of the conditions of the sale is that the current owners will not sell other shares for two years.
"We have no intention of going public so that we can make a fast buck. Quite the contrary. We want to reposition the company, for many reasons. One of these is to be able to retain our staff... The IT recruitment market is getting more and more competitive and we believe that the best way to avoid a high turnover is to offer employees share options," he said. "Another reason for floating shares is because the company has so far relied on organic growth and, to be honest, that can be boring for an IT company. You have to make a serious leap and the only way to do that is through acquisition. This is not an easy strategy as an acquisition can make or break you. We have our eyes on three possibilities abroad but there is also one in Malta that might be of interest. We are in no rush however. There are lots of examples in the industry of entrepreneurs that overexpanded in a short period and lost control of the business. We will avoid that at all costs." The focus during the initial years will be to maintain a good investor rapport, with a clear dividend policy, a good communication strategy - and results. "We will meet the targets given in our prospectus," he said with confidence.
The company has already made a name for itself in the UK, US, Canada and Scandinavia, with several blue chip clients listed on its portfolio, but Mr Bartolo does not think this is enough to maintain existing clients and attract new business.
"This is why many companies designate preferred suppliers. We firmly believe that being a public company will help us get onto these lists at a faster rate" he said.
6PM employs 105 staff and contractors, of which 51 are full-timers in Malta. There may be many IT graduates working their way up the ranks but there are gaps that 6PM needs to fill now and Mr Bartolo warned that this will mean becoming more cosmopolitan.
"We have already recruited people from Portugal. They speak perfect English and actually ask for more or less the same remuneration as the Maltese," he said.
The recruitment situation could get worse when SmartCity is up and running but Mr Bartolo said it could be an opportunity rather than a threat. "I always remember the scene in Shawshank Redemption where Morgan Freeman says: Get busy living or get busy dying," he said.
"Tecom people are coming in droves at the moment and we have expressed interest in meeting them. They could provide scope for expansion. Maybe they might want to acquire us in the future..." he laughed.
But Mr Bartolo is not taking things lightly. He admitted to sleepless nights of soul-searching. "When you build something up over the years, you have to question your motivation and make sure that you are doing the right thing.
"But I went to a wedding recently and met an IT lecturer who told me that his students were aspiring to graduate and come to work for 6PM. What could be more satisfying?"
6PM Holdings plc was set up last May, to act as the parent company of two operating companies - 6PM Ltd which was set up in 2001 and 6PM Management Consultancy (UK) Ltd which commenced operating in 2004. The company will issue 2,250,000 shares at £0.67 each. At this price, the company is being valued in excess of five million.
This offer will not be aimed at the retail market but will be an intermediaries' offer: Brokers will market it directly among their clients. "The offer is aimed at experienced investors so don't expect to see big adverts everywhere," Mr Bartolo warned.
The company had a turnover of 6.5 million in 2006 with a similar amount forecast for this year. "The shares are being sold at a price which takes into account the fact that we are not offering a controlling interest," he said. "British companies that are valued at between four million and 20 million usually trade for a price to earnings ratio of 9.26. We are selling at a ratio of 8.6. This is not an aggressive rating when seen against the forecast rate of growth.
"When it came to pricing, we took the advice of our stockbroker Wilfred Mallia who argued it is better to start our Stock Exchange adventure on a modest valuation. He insisted we should not aim at premium prices. This is not easy for company owners who have grand dreams!" he smiled.
"However, our broker has assured us that once we deliver on the promises made in the prospectus, the market will reward us."
One of the conditions of the sale is that the current owners will not sell other shares for two years.
"We have no intention of going public so that we can make a fast buck. Quite the contrary. We want to reposition the company, for many reasons. One of these is to be able to retain our staff... The IT recruitment market is getting more and more competitive and we believe that the best way to avoid a high turnover is to offer employees share options," he said. "Another reason for floating shares is because the company has so far relied on organic growth and, to be honest, that can be boring for an IT company. You have to make a serious leap and the only way to do that is through acquisition. This is not an easy strategy as an acquisition can make or break you. We have our eyes on three possibilities abroad but there is also one in Malta that might be of interest. We are in no rush however. There are lots of examples in the industry of entrepreneurs that overexpanded in a short period and lost control of the business. We will avoid that at all costs." The focus during the initial years will be to maintain a good investor rapport, with a clear dividend policy, a good communication strategy - and results. "We will meet the targets given in our prospectus," he said with confidence.
The company has already made a name for itself in the UK, US, Canada and Scandinavia, with several blue chip clients listed on its portfolio, but Mr Bartolo does not think this is enough to maintain existing clients and attract new business.
"This is why many companies designate preferred suppliers. We firmly believe that being a public company will help us get onto these lists at a faster rate" he said.
6PM employs 105 staff and contractors, of which 51 are full-timers in Malta. There may be many IT graduates working their way up the ranks but there are gaps that 6PM needs to fill now and Mr Bartolo warned that this will mean becoming more cosmopolitan.
"We have already recruited people from Portugal. They speak perfect English and actually ask for more or less the same remuneration as the Maltese," he said.
The recruitment situation could get worse when SmartCity is up and running but Mr Bartolo said it could be an opportunity rather than a threat. "I always remember the scene in Shawshank Redemption where Morgan Freeman says: Get busy living or get busy dying," he said.
"Tecom people are coming in droves at the moment and we have expressed interest in meeting them. They could provide scope for expansion. Maybe they might want to acquire us in the future..." he laughed.
But Mr Bartolo is not taking things lightly. He admitted to sleepless nights of soul-searching. "When you build something up over the years, you have to question your motivation and make sure that you are doing the right thing.
"But I went to a wedding recently and met an IT lecturer who told me that his students were aspiring to graduate and come to work for 6PM. What could be more satisfying?"