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Matrix Capital trims Xero stake

NZN 18/04/2017 Paul McBeth

US hedge fund Matrix Capital Management has sold down its stake in Wellington-based software developer Xero.

Matrix sold 1.4 million shares, or about 1 per cent of the company, to Silicon Valley tech investor TCV at $20 apiece on April 14 in an off-market deal, for a total of $28.6 million, notices to the stock exchange show.

That was a small discount to the $20.30 price the shares were trading at when the NZX closed for the Easter holiday.

However Matrix first bought into Xero at $6 a share, acquiring 11.5 million shares in late 2012. It later topped up its stake with an additional 715,000 shares at $20 each.

The fund still holds 11.8 million shares, giving it an 8.5 per cent stake.

Palo Alto-based TCV has invested more than US$9 billion across more than 200 companies, including Airbnb, Facebook, Expedia, Netflix and Spotify.

The Xero investment comes from the TCV IX fund, which raised US$2.5 billion last year to focus on mature firms that had proved themselves in the marketplace.

Boston-based Matrix Capital was co-founded by David Goel, a former employee of Tiger Management, where he was mentored by retired US hedge fund manager Julian Robertson, a vocal advocate for New Zealand who was made an honorary knight companion of the New Zealand Order of Merit in 2010 for his services to business and philanthropy.

Xero shares recently rose 0.3 per cent $20.37, having gained 16 per cent so far this year.

The company passed its millionth customer milestone before March 31, and investors are expecting the software developer will achieve a maiden profit in 2019.

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