Entry Price: $0.15

An investment of up to $4 million to fast track expansion in Australia and internationally.


1. Business model and revenue generation process

  • Swift Networks is Digital Entertainment business providing products and services for the hospitality, lifestyle village, aged care and resources sectors
  • Revenue is derived from three sources:
    • Deployment: supplies, configures and installs the hardware and software needed for an entertainment system (one off charge)
    • Content provision: Swift provides access to entertainment such as Foxtel (monthly recurring charge)
    • Maintenance and support: Swift operates a 24/7 support help desk and remote monitoring service (monthly recurring charge)
  • Growth strategy centred around rolling out services to hospitality, lifestyle village and aged care

We liked the simplicity of the business model, established customers (BHP, Rio Tinto, Chevron) and the high contract retention rate (97%)

2. Assessment of management

  • Carl Clump (Chairman) and Xavier Kris (CEO) successfully established and sold the Harpur Group for $220 million followed by Retail Decisions for $640 million. Bob Sofoulis (founder) successfully exited the ASTIB Group for c.$50 million
  • Other senior management have strong backgrounds in sales and electronic communications We prefer investing in companies where management have a proven track record of success

We prefer investing in companies where management have a proven track record of success

3. Financial due diligence and valuation

  • Net cash and favourable relative valuation

    • On a EV/Revenue multiple, Swift Networks traded at 0.6x (at IPO) which compared favourably to peers (12x for XTV, and 41x for oneview)
  • Recurring revenue of $10 million with margins of 30%+ and expectations of positive cashflow in the immediate next 12 months
  • Management entry price into stock was at $0.25, IPO price at $0.15 so strong discount for new shareholders 

Attractive financials and relative valuation with generous entry price into the business

4. Risk identification

  • Management execution of growth strategy: 2-year escrow period for founders provided us with the assurance of alignment of interests in the short to medium term
  • Exposure to the resources sector downturn: was a key risk (and remains so), however, the diversification into other sectors gave us some comfort

5. Assessment of risk versus reward


The recurring revenue, imminent positive free cashflow and relatively cheap entry price was the key driver of our investment decision


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