Independent Newspapers' Mr Gavin O'Reilly and Mr Denis O'Brien of Esat Telecom have each taken 1.5 per cent equity stakes and non-executive positions on the board of Dublin-based software company, Norkom Technologies. The investments complete a $6 million (€6.4 million) funding round for Norkom, putting a $100 million valuation on the company.
Mr O'Reilly and Mr O'Brien have each invested $1.5 million in the two-year-old company. The remaining $3 million funding has come from Hibernia Capital, the Reihill family and three undisclosed private investors.
Strong competition and growth in the customer relationship software market may see Norkom take a public listing on the London Stock Exchange in the final quarter of this year, ahead of existing plans to float next year.
This is the first time Mr O'Reilly has taken a position as non-executive director of a company outside the Independent Group. The investment is understood to be private and was made through an unnamed investment vehicle on behalf of the O'Reilly family. "We are delighted to welcome entrepreneurs of this calibre as both investors and board members. Their experience and industry relationships will add considerable value to the company," says Mr Paul Kerley, chief executive officer of Norkom Technologies.
Mr Kerley is the primary shareholder in Norkom and, along with four founding Norkom personnel, retains a 58.2 per cent fully diluted share capital holding.
An employees' option pool of 15 per cent has been set aside, while Enterprise Ireland retains 3.44 per cent and Trinity Venture Capital holds 17.52 per cent in the firm. The latest investors diluted shareholding is valued at 5.52 per cent.
The company now plans to raise a further $14 million by mid-August from institutional and corporate investors. Most of the funding will come from the US, and will be managed primarily by appointed international brokers, Lehman Brothers.
"At the moment we are very sensitive to our competitors' actions and want to be in a position to go public sooner rather than later. We are raising this large amount of private funding so we cannot be forced into going public, but will move quickly if circumstances dictate," says Mr Colm Crossan, Norkom chief financial officer.
This latest investment will be used by Norkom to gain a leadership position in the customer relationship management market in Europe, and expand Norkom's move into the US. Norkom recorded revenues of $6 million and a loss of $80,000 for the financial year to March 2000. It says it projects revenues this year of $20 million to March 2001.
The company has developed software which will take data from a range of sources within an organisation and apply analytical algorithmic processes to derive meaningful statistics and information about data trends. It has been very successful with mobile telecommunications companies - including Esat - estimating the propensity of clients to "churn" or move to another operator. It says the key to its products attraction is almost real time predictive capability. Norkom employs 200 people and expects to expand this to 320 by March next year.
