Investor appetite for small, loss-making technology stocks is set to be tested again when ikeGPS issues its prospectus to list on the NZX later this month.
Up to $31 million of shares will be on offer. The Wellington manufacturer plans to raise up to $25m of new capital through the float and its existing shareholders will sell an undisclosed proportion of their shares for up to $6m.
IkeGPS makes handheld devices and add-ons to mobile phones that can be used from a distance to photograph and record the exact location of anything from mobile phone towers and power poles to suspected landmines.
Its customers include utilities companies, aid agencies and the US military.
The company was founded by electronics engineer Leon Toorenburg, who got the idea for the business when working in Kenya in the 1990s, helping police work out the best location to site microwave telecommunications towers. He remains a director and the company's chief technology officer.
It is understood sales in the year to March were $1.9m and that the company recorded a loss for the period.
However, ikeGPS has attracted some notable private investors. They include venture capital firm No 8 Ventures, which holds 20 per cent, and former Wellington mayor Kerry Prendergast and partner Rex Nicholls who own just over 10 per cent.
Virginia-based non-profit company In-Q-Tel, which has strong links to the United States Central Intelligence Agency holds a stake of just under 1 per cent.
In-Q-Tel was established by US Defence Intelligence Agency advisory board member Gilman Louie with the support of the CIA in 1999. Its brief is to help US intelligence agencies source the best commercial technology and it often invests in those suppliers.
Forsyth Barr and Deutsche Craigs have been appointed to manage and lead the Initial Public Offering (IPO).
Forsyth Barr analyst Blair Galpin said it would not normally provide research coverage on stocks until 40 days after their float. A key metric for technology companies that had yet to make a profit was their cost of acquiring new sales, he said.
Milford Asset Management analyst Brooke Bone said a licensing agreement that ikeGPS struck with US industrial giant General Electric in December would be a strong selling point for investors.
Under the deal, General Electric subsidiary GE Digital Energy agreed to rebadge ikeGPS' devices and sell them to its customers.
Ultimately the success of the company would come down to its ability to hit revenue targets, Bone said.
IkeGPS chief executive Glenn Milnes said the proceeds from the IPO would accelerate the company's growth, particularly in the US.
The capital would be used to recruit more sales and marketing staff and develop new products and extensions of existing products, he said.