Kainos chief is EY Entrepreneur of the Year

The chief executive of IT services company Kainos, Brendan Mooney, was last night named as the EY Entrepreneur of the Year for 2016 at an awards ceremony in Dublin last night.

The company, founded in Belfast, employs around 950 people in five countries. With a market capitalisation of £235m, it develops solutions for businesses and organisations in the public, healthcare and financial services sectors.

Ian Guider spoke to the Kainos chief at the time of its flotation in London last year:

Kainos, the Northern-based IT services company, says it has no plans to join the Irish stock market after listing on the London stock exchange last week.

The company, which was a spin-out from Queen’s University Belfast in the 1980s, was valued at £164 million (€227 million) following the flotation. Its chief executive Brendan Mooney told The Sunday Business Post that there would be no secondary listing in Dublin. Kainos has about 35 staff in its Dublin office.

“We haven’t really looked at the Dublin exchange. We have strong business in Dublin, but the majority of our business is still Britain-focused, so we felt a British listing was more appropriate,” Mooney said.

Kainos develops software that helps companies and government agencies digitise their services. It has about 730 employees.

Mooney said the reason for the flotation was not to raise extra cash, but to allow some of its shareholders to exit and to assist in winning contracts.

“I’ve a strongly held view that we are best suited to being an independent company. We are bidding for ever-larger contracts, particularly in the British healthcare and government markets, and we feel that having plc at the end of your name does project a solid image of the company.”

Although more than £50 million has been raised from the flotation, most of the proceeds went to existing shareholders who are cashing out, including Queen’s University Belfast and current and former senior staff. Following last Friday’s float, Queen’s will own 16.3 per cent of the firm, while existing and former directors will hold 37.4 per cent. Staff were also given the opportunity to subscribe for shares and will hold 1.6 per cent stake.

Revenues at Kainos hit £60.8 million in the 12 months to the end of March, while pre-tax profits came in at close to £12 million.

The company’s customers in National Health Service trusts and Britain’s Driver and Vehicle Licencing Agency. Mooney said the market for providing the British government with digital services could be worth £1 billion.

“There are a number of drivers behind the government market. Our view is that, as governments seek to become more efficient, they will use digital technology. We have seen a slight increase in activity since the election in Britain.”

The turmoil this week in global markets had little impact on the flotation, with shares in Kainos surging by one-fifth on their debut.

“I guess it comes down to the quality of the asset you are putting on the market. We found a really strong uptake, and were pleased with the subscription level,” Mooney said. Kainos is only the third listed company in the North.

Who are the new Kainos millionaires?

By Barry J Whyte

The first day of trading on the London stock exchange has made millionaires of the directors of Kainos. Shares in the company surged higher than its IPO price of £1.39, rising well above £1.70 at times - valuing the business at more than £200 million.

The biggest shareholder, Queens University investment arm Qubis, earned nearly £28 million from the sale of its initial tranche of shares prior to the IPO, and now it’s sitting on a 16 per cent stake worth more than £32 million. Kainos founder Frank Graham sold his stake before the flotation for £9.4 million.

Chief executive Brendan Mooney’s 14 million shares were worth nearly £24 million on day one.

Graham had already made £4 million from selling a chunk of shares before the IPO. Chairman John Lillywhite holds 434,000 shares worth £737,800, on top of the £1.9 million he earned selling his shares prior to the float.

Chief financial officer Richard McCann’s 5.2 per cent shareholding is now worth more than £10 million.

Corporate development director Brian Gannon made a million pounds selling shares before the float, but still holds nearly £10 million worth of shares, while senior vice president for sales Paul Gannon sold two million for over £2 million, and now holds a stake worth £15.5 million.

Shareholders agreed not to sell off their shares for a year after the flotation.