Freelancer’s IPO is no exit for Matt Barrie

Freelancer.com has ambitious expansion plans. Its CEO says the company, an online marketplace and auction house for freelance jobs, will be the ‘eBay of jobs’.

Its prospectus, lodged yesterday with the ASX, is full of similarly lofty statements.

“I find it hard to believe that with 7.1 billion people in the world, only 2.7 billion people are on the internet,” wrote chairman and CEO Matt Barrie. “Almost 4.5 billion people are yet to connect.

“We are confident that there is tremendous growth potential ahead for the company, as the rest of the world’s population goes online. Today our analytics reports that our users connect from 247 countries, regions and territories. Some of these users have been active as far back as 2000, through our acquisitions. Many use our site to generate an income and feed their families. Some log in every day to do so.”

The company, Barrie continues, has always sacrificed profit for future growth. And it seems to be this future growth that is driving the desire to list on ASX.

But the IPO is tiny. Freelancer.com won’t see its owners cash out, or see a large injection of funds into the business. When it lists on November 15, it’ll sell just $14.2 million worth of shares, or 6.7% of the company. This is less than one year’s revenue – the company is expected to make $18.3 million in calendar year 2013.

In September, the company rejected a $430 million bid from Japanese recruitment site Recruit Co, which valued Barrie’s 46% stake at close to over $200 million, landing him on the Young Rich list. At 50 cents a share, the Freelancer prospectus values the company at close to half what its most public buyout offer has been.

With so little script on offer, why bother listing at all, especially given the regulatory burdens associated with running a public company?

SmartCompany put the question to Barrie. He said the IPO was very much about setting in place a foundation for the company’s growth while allowing him and his executives to retain a measure of control and flexibility.

“We certainly had a lot of options on the table,” he told SmartCompany this morning. “We had a huge amount of interest from late-stage private equity, and from venture capital.”

That would be the traditional path to gain access to growth funds. But Barrie says his company has done well on relatively little capital injection to date, and only needs a small cash injection now.

“Listing gives us the most flexibility. It allows us to stay masters of our own destiny.”

When a company lists, Barrie says, its script is its currency. “So if we wanted to use our stock for acquisitions, and I’m not saying we will, we can do that.”

It’s a curious view. Private companies normally avoid listing for a perception of the onerous regulatory burden involved. The level of public disclosure is far higher in a listed company, as is the scrutiny from analysts and the media.

But Barrie says there are a lot of misconceptions about listing, citing as a counterpoint the way it’s used by junior miners as a vehicle for growth.

“The primary route that junior explorers raise money in Australia is from listing. They’ll raise, say, $1.3 million, and no one bats an eyelid.

“There’s a whole misconception that the environment here is like that in the US. But it’s widely different. In the past five years, more money has been raised in equity on the ASX than on the NASDAQ.

“If things go successfully for us, we could see technology companies using listing the way miners do in Australia.”

Needless to say, for Matt Barrie, this isn’t an exit. “I’m not selling a single share,” he says. “I love this company.”

This story first appeared on SmartCompany.