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Mergermarket: Zimi welcomes advisory pitches, monitoring deal opportunities in smart home technology market

26 Jul 2021

Zimi [ASX:ZMM], the Australia-based smart home technology company formerly called Quantify Technology, expects consolidation in the burgeoning global market and is still eyeing potential deals, CEO Brett Savill said.

The Queensland-based AUD 10.25m (USD 7.57m) market capitalisation company welcomes pitches of prospective targets from corporate, financial, and/or legal advisory firms to assist with the process, the CEO told Mergermarket.

There are a lot of players in the growing global smart home technology market, which will lead to consolidation over the medium term, the CEO said. As a willing participant in that consolidation, Zimi will pursue value-creating deals with targets that offer complementary distribution channels and technologies, he added.

Zimi will also use licensing models to distribute its service offerings including white labelling, which a company presentation said reduces upfront capital requirements and is an effective way to expand into new markets.

The CEO declined to comment on what the catalysts will be for Zimi to buy a target over engaging in either a licensing or strategic partnership agreement. He also did not comment on how much could be spent on M&A.

In December 2020, Quantify Technology acquired privately held GSM Innovations and its Zimi brand. GSM Innovations is a subsidiary of Gerard Private, which currently has about a 40% shareholding in Zimi. Gerard Private CEO Simon Gerard is Zimi’s chairman and his company, Trader, is one of the company’s key distributors. The Gerard family’s electrical tradition spans back to 1907.

“Shareholders are looking for us to deliver on the organic growth we outlined when the (GSM) transaction took place, but longer term we are always interested in the right deal. As the business grows, we are increasingly aware we have a cloud and software platform that is valuable to third parties. Commentators call this product-as-a-service (PaaS),” the CEO said.

In October last year, this news service reported that the company would assess acquisitions once the GSM transaction had been integrated into its portfolio.

Zimi, which specialises in connecting electrical products to create smarter living and working spaces, has since opened a new head office in Helensvale in Queensland, which serves as a training centre for electricians, architects, distributors, and builders, Savill said.

Meanwhile, while Zimi has been considering options to enter China, Taiwan, and the US, COVID-19 has shifted its focus. One positive change has been that with global travel restrictions Australians are spending more on renovations and housing, “which is great news for us” in terms of doing more business. However, while the company is having conversations with potential global distribution partners, it has not been able to meet face to face, which has stymied the process, Savill said.

Since integrating GSM into its portfolio and rebranding to Zimi, the company’s share price has more than doubled, on the back of the consolidated entity’s products now being sold in Australia through ASX-listed Beacon Lighting [ASX:BLX], Trader (to electrical wholesalers), Harvey Norman, and Steel-Line Garage Doors, the CEO said.

Its share price today (19 July) closed trade at AUD 0.017.

According to an April company presentation, the smart home market is growing rapidly globally led by Google [NASDAQ:GOOGL], Amazon [NASDAQ:AMZN], and Apple [NASDAQ:AAPL]. The projected revenue growth (CAGR 2021-2025) for Australia is 12% (AUD 3.5bn), while in the US it is 13% (AUD 40.3bn), the presentation said.

Savill joined Zimi in 2018 and is a former partner at multinational professional services firm PwC.

Written by Adam Orlando – Mergermarket.

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