It’s on... Atlassian files paperwork for a US IPO

Australian technology heavyweight Atlassian has filed for an initial public offering in the United States in a crucial step toward a $3 billion-plus listing that could ignite activity in the local tech sector.

The deal would be the biggest ever IPO of an Australian technology business, overshadowing accounting software group MYOB’s $2 billion float on the Australian Securities Exchange in May.

Freelancer founder Matt Barrie said that Atlassian is a “great company” and a “flagship of the Australian tech industry”, but he lamented the decision to float in the US rather than Australia.

“The best thing Atlassian could have done for the local sector would have been to list in Australia,” he said.

Freelancer, a $632 million leader in online freelancing, outsourced services and crowdsourcing marketplaces, was one of the hottest new issues when it hit ASX boards in November 2013.

Mr Barrie said that there was more than $300 million of interest in just $15 million worth of Freelancer’s equity.

He said Atlassian would have had “a tremendous debut on the Australian market” if it listed here.

“They would have had a good chance of trading at a significant premium [in Australia] because they would have been the best thing on the bourse and they would have been in the [ASX200] index,” he said.

“If you’ve got an attractive business investors will find you and invest in you.”

Shot in the arm

Right Click Capital partner Benjamin Chong said that an Atlassian IPO, even if it takes place on a foreign exchange, would be a major shot in the arm for Australian innovation.

“The listing of something like Atlassian would be very good for the local tech start-up community,” he said.

“It could be the beginning of what happened in Seattle when Microsoft listed and all the executives and managers started putting ideas and funds back into the local economy.”

In 2014, T Rowe Price and Dragoneer Investment Capital paid $US150 million for a 6 per cent stake in Atlassian, valuing the company at about $US3.3 billion.

Public by end of 2015

The software developer has lodged IPO documents and has called on investment banks Goldman Sachs and Morgan Stanley to take the company public by the end of 2015, The Wall Street Journal reported.

Atlassian reportedly filed its prospectus under the Jumpstart Our Business Startups (JOBS) Act, which permits growth companies with less than $US1 billion in annual revenue to file their IPO paperwork confidentially.

Company co-founders Scott Farquhar and Mike Cannon-Brookes, both 35, have a combined estimated net worth of $2.1 billion.

Mr Cannon-Brookes said “no comment” when contacted by The Australian Financial Review on Sunday about the IPO filing.

Mr Farquhar and Mr Cannon-Brookes are estimated to own between two-thirds and 78 per cent of the company.

The impending IPO would catapult the two entrepreneurs into the top 20 richest Australians.

Atlassian was founded in 2002 by the university classmates using $10,000 in credit card debt. The company builds software to help IT departments, computer programmers, and other professionals work together online.

Its two key products are task-tracking tool Jira and project planning aid Confluence.

Figureheads

Mr Cannon-Brookes and Mr Farquhar have become figureheads for the nation’s nascent technology sector. Mr Cannon-Brookes has been vocal about preserving the Australian Technology Park in inner-city Sydney as an innovation hub.

News of the impending Atlassian IPO comes as new Prime Minister Malcolm Turnbull puts fresh emphasis on the importance of technology, innovation, and digital disruption to Australia’s economy.

Mr Turnbull has appointed Australia’s youngest MP, the 25-year-old Wyatt Roy, as assistant minister for innovation under the new innovation, industry, and science portfolio held by Christopher Pyne.

Following a fact-finding mission to Israel in December 2014, Mr Roy is a firm believer in policy that supports innovators through commercialisation and seed funding.

Labor’s Jason Clare, the opposition communications spokesman, has already flagged his party’s bipartisan support for policy that aids Australia’s digital economy.

Clear intentions

Atlassian appointed former General Electric and eBay executive Erik Bardman as chief financial officer in February in a clear move toward an IPO on either the NASDAQ or the New York Stock Exchange.

At the time of Mr Bardman’s appointment, Atlassian president Jay Simons told the Fairfax Media that there are only a handful of household names in the B2B (business-to-business) space including Oracle, Microsoft, IBM, and SAP, and Atlassian is “on the path to joining that club”.

Oracle, Microsoft and IBM all have primary listings on American stock exchanges while Germany’s SAP has American Depository Receipts listed in New York.

Mr Cannon-Brookes said in August that there was no deadline on an IPO and the company was in no hurry to list.

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