Cloud-based accounting software supplier FreeAgent, which focuses on the micro business market, has announced plans for a flotation on the Alternative Investment Market (AIM) next month, with the aim of raising funds to accelerate product development in the light of the government’s Making Tax Digital (MTD) initiative, which will require quarterly online returns
The Edinburgh-based company says it also wants to increase its reach to large accountancy practice customers. No values or details of the sum to be raised have been released.
Ed Molyneux, chief executive officer of FreeAgent Holdings, said: ‘With five million micro-businesses in the UK, FreeAgent is well positioned to transition micro-businesses away from relying on spreadsheets to manage their finances to taking a more automated and digital approach to their accounting.
‘We believe that the proposed placing and admission to AIM will provide the springboard necessary to help us accelerate our growth and to attract more customers through both our direct and accountancy practice channels, introducing the benefits of FreeAgent to thousands of other businesses.’
Set up in 2007, FreeAgent specialises in cloud-based software-as-a-service (SaaS) accounting software solutions and mobile applications for UK micro-businesses, and has around 52,000 active subscribers currently, up from 32,000 in July 2013.
The company says revenue grew at a compound annual rate of 34% in the two years from 31 March 2014 to 31 March 2016, with annualised committed monthly recurring revenue (ACMRR) at the financial year end standing at £6.8m (unaudited).
ACMRR at 31 July 2016 stood at £7.6m (unaudited) and FreeAgent reports sales growth has continued since that date, with ACMRR further increasing to £7.7m (unaudited) by 30 September 2016.
In October 2016, the group saw the soft launch of a new commercial collaboration with a major UK bank under which small business customers of that institution which meet FreeAgent’s core target market profile will be offered the branded FreeAgent SaaS solution as an additional part of their account on-boarding process.
The company has appointed Andy Roberts as non-executive chairman. A computer industry veteran, Roberts led The Innovation Group from 2009 until its sale to Carlyle Group in 2016 for £500m.
FreeAgent’s plan to float comes less than a week after Misys, the UK financial software group, abandoned plans for an IPO after it failed to convince enough investors to buy in.
