Firm helps first listed company to raise via equity crowdfunding marketplace

by Sol Dolor21 Sep 2016
Chapman Tripp was G3 Group’s legal advisor in its capital raising offer, the first such undertaking to raise through an equity crowdfunding marketplace.
“G3 has become a bit of a trailblazer in New Zealand, being the first company to list on the new NXT market and now the first listed issuer to use an equity crowdfunding format,” said Chapman Tripp partner Roger Wallis, who led the Chapman Tripp team.
The business mail operator, which listed on the small-cap NXT bourse last year, is looking to raise up to $3million in the offer which will run for up to 30 days.
Wallis said that the structure of the deal for the Auckland-based company breaks new legal ground because it used three legal frameworks: the Financial Markets Conduct Act ‘same class’ regime, the NXT market rules and the Snowball Effect marketplace.
“G3’s offer is not technically an equity crowdfunding offer because it does not rely on the equity crowdfunding regulations.  But it does use the Snowball Effect client database as an efficient channel to reach a wide investor audience,” said Wallis.
Moreover, not only was the structure of the task bespoke, so was its execution. Wallis pointed out that the transaction did not use the normal broker networks.
“While listed companies have simpler regulatory requirements when offering securities due to ongoing disclosure, in this instance the offer is too niche for most NZX brokers. Snowball Effect was able to fill this gap by providing G3 with an alternative means to distribute its offer,” he explained.
“This raise could potentially widen the investor base for G3 Group, as well as pave the way for other companies now listed on the NXT – Marlborough Wine Estates Group, Oceania Natural, and Snakk Media – to look at other options for raising funds in the future,” he added.