First-day drop for Diligent
Diligent raised $24 million in an over-subscribed initial public offering at $1 a share.
The shares ended the day at 95 cents after trading started at 11am yesterday.
The NZX top 50 index was down 27 points to just under 4000, as most world markets fell because of disappointment with a modest interest rate cut in the United States. The NZX 50 index is at its lowest in almost a year.
Last week Diligent issued a statement distancing itself from Mr Henrys brother, Gerald, after an article highlighting his bankruptcy in 1989 and fraud conviction in the US in 1996.
Gerald Henry founded Energycorp, which crashed in 1988 owing about $20 million.
The statement said Gerald Henry had no interest in the company and was not employed by it.
Speaking at a listing ceremony at the NZX offices in Wellington yesterday, Brian Henry said the NZX had given him a telling off after the article and though he had been advised disclosure was not necessary, he took responsibility.
In hindsight I should have said something about this, I really should have. I didnt think I had to. It was a mistake.
One broker said the share price fall was odd investor behaviour, blaming the bad publicity.
Andrew McDouall, managing director of McDouall Stuart Securities and lead manager of the Diligent float, said it would be an unusual philosophy that led investors to buy a share at a dollar and sell it later in the day for less.
He would not be drawn on the cause.
Diligent, a New York supplier of online information management systems for company boards, was founded by Mr Henry.
He moved the companys software design division to Christchurch after the terror attacks in New York.
The listing is only the fourth float this year, excluding mutual funds.
Currently, the company has a handful of fulltime international sales and marketing staff. The IPO funds will be used to increase the number to 48 by mid-2008 and 78 the following year.
The prospectus projects sales revenue of $7.6 million in 2008, rising to about $30 million in 2009.
A feature of the offer is a performance warranty in which the founding shareholder, DBMS LLC, will forfeit up to 20 per cent of its shareholding if licence fee projections fall short.
Diligents 60 corporate clients include Motorola, AIG SunAmerica Funds, the NZX and Vecta.
Though the company is likely to face stiff competition from US vendors such as BoardVantage and Thomas Boardlink, Diligent said only 20 per cent of US companies used a Web-based portal for board documentation so the market was wide open.
Mr McDouall said the company had a strong base and, as long as it kept to its sales targets, it would offer good value to investors.
It is a potentially high-growth company starting from a solid platform of blue chip clients.
The original software was developed over three years for AIG SunAmerica Funds.
Mr Henry said few companies were interested in the software earlier on.
But after the fall of companies like Enron, Tyco and WordCom, and the introduction of legislation tightening US company governance, interest rose.
An article in the Wall Street Journal last year prompted a flood of interest.
