Irish construction tech firm Zutec raises €10m through rights issue

Irish construction software company Zutec has raised €10 million through a rights issue to support further expansion.

The move comes hot on the heels of the company making its first acquisition, buying British asset management tech firm Createmaster last month for €5 million

Zutec is a site-based project management and quality assurance tool used by clients that include Cairn Homes, Durkan, the Health Service Executive, Marlet, Taylor Wimpey and AECOM.

Projects

Its cloud-based software has been used on a number of major infrastructure projects in recent years, such as the National Children’s Hospital, HS2, Thames Tideway Tunnel, the Shard tower, Wembley Stadium and various international airports.

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Founded in 1999 by Brian McGuire, Zutec became the first Irish firm to list in Sweden when it joined the Nasdaq First North exchange in Stockholm in a €5 million initial public offering in early 2018.

The company this week issued 16,666,666 shares in Stockholm in order to raise SEK 100 million (€9.9 million). The share issue has resulted in a 27 per cent dilution for Zutec’s existing shareholders.

Zutec, which has offices in Dublin, London and Melbourne, held a similar rights issues in June 2020 in a move that netted SEK 40.4 million for the company.

Speaking to The Irish Times, chief executive Gustave Geisendorf said the deal for Createmaster was just one of a number of planned acquisitions.

“We’re going through a period of strong organic growth and we intend for that to continue but we will be supplementing this with acquisitions. The pandemic has forced the whole construction industry to finally engage fully with digital transformation and we stand to gain from this move,” he said.

Zutec reported net sales of SEK26.7 million for the year ending June 2020, a 24.6 per cent rise versus the previous 12 months with ebitda totalling SEK11.9 million.

Mr Geisendorf said revenues were now at about €8 million with the company aiming to grow this to €20 million within three years.

Planned

“I expect we will hit that target earlier than planned,” he said. “The global construction industry is projected to reach $10.5 trillion by 2023 and our part of the market is growing by between 15 to 20 per cent recently and we’re beating that with around 50 per cent growth so there is plenty of opportunities for us,” Mr Geisendorf added.

Analysts at SEB, which initiated coverage of Zutec in February, recently said they see "ample room for Zutec to grow by transitioning one of the least digitised industries in the world".

It estimated the company Zutec will grow sales at a compound annual growth rate of 33 per cent for 2019/20 through to 2022/23.

Zutec currently employs about 100 people with plans to add to its headcount as it expands.