“We aim to lead our market”
Top Image Systems will raise $10m in Tel Aviv this week.
Shiri Habib 4 Dec 06 16:01
“We’ve just come back from a conference in Berlin, where we saw 200 of our customers. We looked like a $100 million company and we aim to actually become one,” said Top Image Systems Ltd. (Nasdaq: TISA; TASE:TISA) CEO Ido Schechter yesterday at a conference held at the Tel Aviv Stock Exchange (TASE) to mark the company’s dual listing. The first stage towards realizing this goal will come in 2007, when Top Image expects to record $30 million revenue, compared with $20 million in 2006. “We will reach $24 million revenue through organic growth, with a further $6 million from an acquisition that we plan to make,” said Schechter.
To finance the acquisition, Top Image will raise $10 million this Thursday in a bond issue on the TASE. The underwriters for the issue will be Tamir Fishman Asset Management Ltd. and IBI Investment House Ltd. (TASE:IBI). “The issue will support our merger and acquisition plan, and will also increase our liquidity,” said Schechter. Top Image had $9.9 million in cash at the end of the third quarter. Schechter would not disclose any details on the expected acquisition but stressed that the company to be acquired would be a profitable one. “We know how to lose money on our own,” he said jokingly.
Top Image was founded in 1991 by Itzhak Nakar, who currently serves as chairman. The company specializes in enterprise software solutions for managing and validating content entering organizations from various sources. Its customers include FedEx Corporation, Alcoa and Deutsche Bank. Top Image currently employs 110 people, 40 of them in Israel. “We are an Israeli company. Our home and roots are here,” said Schechter. “We are the classic candidate for dual listing - fairly small for Nasdaq, but an excellent size for the Israeli market.” Top Image currently has a market cap of $33 million, and it posted a net profit of $641,000 in January-September.
“We may not be in a sexy market such as telecommunications, but our market is big and it is expanding,” said Schechter. “It is now worth an estimated $1 billion, and it is growing at an annual rate of 15-18%.” He notes that a year ago, US storage giant EMC Corp. (NYSE: EMC) acquired Top Image’s rival Captiva, and the market has been left without a leader ever since.
Two other companies, Kofax (a division of DICOM Group plc (LSE: DCM.L), and Readsoft AB, operate in a similar field to that of Top Image and have annual sales of $40-45 million, double that of Top Image. Schechter insisted, however, that the company’s goal is to become the market leader. “The market is desperate for a leader, so we want to be aggressive over the next two years, and make two or three acquisitions. We aim to take the lead in the Far East, and perhaps merge, later on, with another company and enter the US market too. It won’t happen tomorrow but we have patience.” He added that most of the market was now concentrated in the US, although Top Image does not have substantial activity there. It does, however, lead the market in Japan, where its activity accounts for 20% of its revenue.
Published by Globes [online], Israel business news - www.globes.co.il - on December 4, 2006
