In case you’ve missed it, ASX COVID-era tech darling Bigtincan Holdings (ASX:BTH) has received a takeover offer from the USA’s Investcorp – one of the world’s largest asset managers. 

The implied offer price of that deal is $0.48cps and the Board is solidly backing it.

It is a premium to its current price of around 17cps, albeit still well below where it sat during COVID.

But the Board has firmly outlined why it believes BTH shareholders should vote in approval of the offer at its upcoming AGM on Friday 29 November at 9.30am AEDT.

(Proxy forms are available on the company’s Investors portal on its website.) 

Another Aussie business heading for the big time

In short: If all goes ahead, Investcorp AI Acquisition Corp will take Bigtincan Holdings to Wall Street, where it will list on the NASDAQ. It’ll inject US$12.5 million and take a 20 per cent stake in the company.

There’s far more enthusiasm for tech stocks on Wall Street than there is on the ASX, where investors are more interested in banks and mines. 

There is a competing, but non-binding indicative offer from a US private equity firm called Vector Capital. Its takeover offer for Bigtincan has been at $0.22cps – clearly below Investcorp’s implied price of 48cps. 

And here’s the other thing about private equity: those firms buy struggling companies, oftentimes victim of circumstance (like Bigtincan’s volatility in the face of macro trends it can’t control), and then later sell them on.

Shareholders might be able to score 22cps for their shares now and get out, but then they’ll be gone forever.

A listing on Wall Street’s NASDAQ index could see those shares command a price far higher than A$0.22cps in the coming months and years. 

But let’s step back. 

For those unfamiliar, Bigtincan produces enterprise software. In other words, computer programs that help businesses manage everything from sales to customer enquiries.

And Bigtincan considers itself a global leader in that field as well as in its adoption of AI – global enough to command considerable attention from Wall Street. 

Big names underscore big value 

Its client base underscores that reputation, as CEO and cofounder David Keane told HotCopper.

“We have amazing customers around the world – organisations like Google, Nike, Sephora, AT&T and many others, and these organisations are proving that Bigtincan’s technology and approach to sales enablement really works,” Keane said. 

That doesn’t address its onshore customers, either. 

Bigtincan provides software to the Federal Australian Department of Defence (DoD) and Seek Ltd (ASX:SEK); zooming back out to the global level, it also provides services to GUESS, ThermoFisher, Bayer, and Novo Nordisk.

There is, after all, a reason the company shot to record highs during the COVID years of around $1.36/sh. 

And it could get back there, given that tech companies enjoy far more liquidity – and confidence – from Wall Street investors, both institutional and retail. 

“The Board believes that this move to NASDAQ with the support of Investcorp offers Bigtincan’s shareholders an opportunity to achieve a potentially significant increase in value, and, to build upon the work this company has done over the last few years to build what is undeniably a global leader,” Keane explained. 

Consider the company’s recent forays into AI – a trend that Wall Street is hungry for. (Just look at OpenAI’s increasingly stratospheric valuations.) 

“When you add [our existing strengths] to the impacts of the AI technologies that Bigtincan has been building we see a significant opportunity to continue to bring the smartest people in the world into our team to grow value for all,” he said.

“Investcorp have talked about expanding our investments in Hobart, Tasmania, to grow an AI Technology Centre there bringing new well paid jobs to Australia – and that vote of confidence from one of the world’s largest asset managers is wonderful for Australia.

“Really speaking, this is about providing a chance for shareholders to play again at a new level.”

Wait. What happened to the share price? 

In recent history, Australian tech stocks broadly have been subjected to a re-rating epidemic of their own, driven by the end of that other great epidemic – COVID-19. 

As at 3pm Sydney time on Thursday 14 November, Bigtincan is trading at just 17.5cps – which Keane states, in Investcorp’s view, is firmly below its intrinsic value. 

As I’ve already mentioned, in August of 2021, it traded at $1.36/sh – and there’s a clear thread painting the reason it got there. 

Hark your mind back to the early years of COVID, where there were microchip shortages for automakers as tech companies fought for the assets to boost sales of computers and hardware needed to run Zoom. 

Everybody was working from home and no business, really, was doing bricks and mortar or face-to-face contact. 

It was a very good time to be in tech – especially for Bigtincan, whose software ultimately allowed companies to pivot into remote operations. 

However, Keane cites that Australian investors may be fickle.

“It’s one of the challenges of Australia – the re-rating of tech stocks in Australia over the last few years has been really tough for our shareholders, tough for many shareholders, and I think that some of the institutions really don’t know how to react to that,” Keane stated. 

While the S&P500 has been uplifted by 7 megacap tech companies in recent history, Australia hasn’t seen such a boon for its IT stocks. We’ve got Wisetech (ASX:WTC), Xero Ltd (ASX:XRO) and NEXTDC (ASX:NXT) still valued in the tens of billions, but that’s about it. 

So can small shareholders still see gains? 

For retail shareholders with less than 5,000 BTH shares in their portfolio, there has been made a concession from Investcorp that could see those holders cash out for 23.5cps, or, they can pick up an international trading account – and no shortage of services offer that.

So smaller shareholders can absolutely expose themselves to the liquidity that a NASDAQ listing is sure to bring. 

“The bottom line is, any shareholder, all they have to do to get liquidity once [we] move to NASDAQ is to have an overseas trading account. It’s just like you’re holding Tesla shares,” Keane told HotCopper.

Obviously, the CEO and cofounder of Bigtincan would want to expose the company to Wall Street tier volumes.

And of courseInvestcorp, the company that wants to buy Bigtincan for cheap, would present its offer to be a good deal.

But it’s not just those parties voting yes. So too is Bigtincan T20 constituent Ingalls & Snyder, a NY-based investment manager and long-term shareholder. 

“The Nasdaq is the global home of innovative technology companies. This change in listing may lower Bigtincan’s cost of capital, be more attractive for acquiring and retaining talent and serves as a strong reference point for acquiring customers on a global basis,” Ingalls & Snyder wrote in a recent public letter favouring the deal. 

As stated earlier, BTH has received a non-binding acquisition proposal from Vector Capital at a price of A$0.22/share.

“This valuation is substantially below BTH’s US peer group and does not represent the quality of the business or its future growth potential,” Ingalls & Snyder said. 

What happens next lies with BTH shareholders. Keane hopes they’ll agree that a move to the NASDAQ is the best opportunity on the table.

BTH last traded at 17.5cps.

Join the discussion: See what HotCopper users are saying about Bigtincan Holdings and be part of the conversations that move the markets.

Disclaimer: Bigtincan Holdings was a client of HotCopper at the time this piece was written.