Innovative data centre security and smart-locker company TZ Limited (ASX:TZL) has locked in a $4 million debt facility to fund its acquisition of tenant engagement platform Keyvision Holdings and repay part of an existing loan.
Completion of the deal is subject to shareholder approval.
The total price tag of the proptech business, worth up to $10m, will be paid across four years and has been structured as a performance-based agreement subject to Keyvision hitting certain revenue and growth targets.
Founded 27 years ago, TZ revolutionised smart locking technology with its innovative use of shape memory alloy (SMA). By combining SMA with microprocessors, the company developed a groundbreaking electronic locking and fastening mechanism. The TZ “SMArt” system offers a more secure, software-controlled alternative to traditional locks and keys, with the added benefit of remote operation.
TZ intends to use $2.5m of the $4m funding package to make its first instalment payment on Keyvision.
The senior secured loan - provided by Sydney-based Causeway Finance at an interest rate of 12 per cent – will also be used to repay part of TZ’s outstanding $2.8m debt.
TZ’s existing secured financier, First Samuel, also sees strong synergies in the deal and has consented to the new facility provided that $1.3m of the fresh funds are applied to repay some of its loan facility.
A further $200,000 has been allocated for advisory fees and working capital. At completion, TZ’s total borrowings will stand at $5.5m.
As a strong sign of confidence in the potential for the deal to unlock growth, Keyvision principal Mark Davis and the company’s senior management have also committed to buying 9.5 per cent of the outstanding capital in TZ, currently held by First Samuel.
“This deal marks a significant milestone in our strategy to expand our technology solutions and drive new revenue streams.” TZ Limited chief executive officer John Wilson
Keyvision is an important piece of TZ’s plan to grow its recurring revenue and expand its customer base.
TZ already brings in a solid $3.9m from high-margin, recurring revenue streams. With Keyvision set to contribute an additional $1.6m in its own “sticky” annual revenue in 2025, that figure is on track for a significant boost.
If Keyvision can hit its ambitious growth targets - scaling to $3.5m in annual revenue by year four – the combined recurring revenue will almost double to $7.4m even before factoring in any expansion in TZ’s core smart-locking business.
The prop-tech space is rapidly changing as landlords and property managers increasingly use digital solutions to stay in contact with residents and improve tenant experiences.
Keyvision’s platform overlaps TZ’s existing customer base in the residential market and the acquisition appears a natural fit for TZ’s existing smart locker and access control solutions.
Management says by bringing the two businesses together TZ can start to cross-sell into both customer bases, which will help grow its recurring software as a service (SaaS) revenue streams and pave the way for sustained earnings growth.
Beyond strengthening its Australian market position, TZ is planning to use the acquisition to widen its footprint in overseas markets, especially in the United States where it already has a strong presence in the education sector. The company sees a big opportunity in introducing the Keyvision offering to student housing, faculty offices and corporate campuses.
In Singapore, where TZ is growing its relationships in the property sector, there may be immediate opportunities to roll Keyvision’s platform out to major commercial and residential developments.
TZ has a strengthened financial position, expanding market opportunities and strong backing from its funding partners, and is apparently poised for significant growth as it scales its smart property solutions globally.
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