Gefen International AI (ASX:GFN) share price crashes 19% after IPO

The market may have charged higher but this new listing certainly didn't…

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The Gefen International AI (ASX: GFN) share price had a very disappointing start to life on the ASX boards.

On Wednesday, the technology company's shares ended the day 19.5% lower than their listing price at 80.5 cents.

The Gefen International AI IPO

Gefen International AI shares commenced trading on the Australian share market yesterday following the successful completion of its oversubscribed initial public offering (IPO).

The company raised gross proceeds of $25 million at an issue price of $1.00 per share. Management advised that the IPO was underpinned by a high-quality shareholder base of institutional and retail investors. This includes strong support from existing Gefen shareholders such as Regal Funds Management, Ellerston Capital, and Perennial.

With approximately 127.9 million shares on issue, Gefen International AI had a market capitalisation of $127.9 million upon listing. This has now reduced to just over $100 million following its disappointing first day of trade.

What does the company do?

Gefen International AI describes itself as a platform provider that empowers and transforms agent-based networks. It has developed a disruptive platform for regulation-heavy industries in which carriers use agents to sell complex products to customers.

It generates revenue from two key sources. The first is through recurring subscription license fees paid by carriers. The second is transactional agent solutions fees paid as commissions by carriers from sales generated through the independent agent network.

Management notes that it operates in a large and growing global market which was worth an estimated $358 billion in 2020 and is expected to grow to $462 billion by 2023. This compares to the revenue of $16.4 million that it achieved in 2020.

Gefen's Co-Founder and Co-CEO, Orni Daniel, said: "We are very pleased with the overwhelmingly positive response our IPO has received. Gefen gives investors access to a unique opportunity that has significant potential for growth across global agent-based industries."

"With the funds raised in the IPO, we will be able to implement additional upgrades to our platform and invest in the marketing and growth initiatives that will help us continue to scale."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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