The reverse-listing of New Zealand company Rex Bionics on London’s growth-oriented AIM exchange represents a “quantum leap” for the young company – and is possibly just the second example ever of a Kiwi start-up doing so.
The placement is part of a deal that will see North Shore-based Rex Bionics acquired by investment company Union MedTech (UMT) once it lists on the AIM exchange and takes on the New Zealand firm’s name. UMT sold 5.56 million shares at GBP1.80 each in a placement last week, which will leave a net GBP8.8m for Rex Bionics once the transaction is completed.
Simpson Grierson commercial partner, Michael Sage, whose team included senior associate Matt Smith, advised UMT on the New Zealand aspects of what he says was effectively an IPO.
“It’s a quantum leap for what’s a very early stage New Zealand technology company to move from the point where it has been largely funded by grants, friends, family and venture capital (primarily through No.8 Ventures) to being the sole business of a UK-listed company, which is raising GBP10m in new equity to fund the acquisition and provide additional working capital for Rex,” says Sage.
As far as Sage is aware, only one other New Zealand business has ever listed on the AIM: Endace Ltd, which listed in 2005 and has since been taken over. Rex Bionics is different to its predecessor in that it’s being acquired by Union MedTech plc, which is already listed on the AIM.
“Because the UMT group's sole undertaking will be the Rex business and because the Rex shareholders are receiving UMT shares in exchange for their Rex shares, the transaction has some similarities to a reverse listing of Rex on AIM, even though it isn't actually structured that way,” says Sage. “As far as I am aware, this is the first time that a New Zealand business has been taken to the market in this way.”
Sage says the transaction involved strict due-diligence and restructuring in order to enable UMT to satisfy the requirements for listing on AIM and carry out a public capital raising.
“These are things that growth companies tend to do in a series of steps over a number of years,” he says. “In this case it had to be done in a single step which required a lot of planning, co-ordination and documentation.”
Another complicating factor was that, during all of this, Rex Bionics had to keep trading and UMT needed to provide access to interim working capital over the six months leading up to the AIM listing of/capital raising by UMT and the closing of its acquisition of Rex (both occurring on 8 May).
“While this interim funding was intended to keep Rex ticking along, it will be the new capital raised (GBP10m) that will allow UMT to significantly expand Rex's sales and production capabilities and move Rex onto the world stage,” says Sage.
Simpson Grierson became involved with UMT as a result of experience in the life sciences sector and Sage says this is UMT’s third investment in New Zealand medical technology markets.
The investment bank involved in the UK transaction was Oriel Securities, advised by the London office of Stephenson Harwood.
UMT’s UK lawyers were Simmons & Simmons, with whom Sage and his team worked closely throughout the transaction. “We did have to restructure the transaction so that it fit in with the AIM listing process, so it involved a really close liaison over a long period of time with Simmons & Simmons,” he says.
Rex Bionics’ New Zealand lawyers were Bell Gully, led by partner David Flax.
The New Zealand patent attorneys advising were AJ Park.