January is normally a quiet month for IPOs and this year has been no different, but here are a few companies intending to list on the ASX in February which may be worth keeping an eye on.
ARMnet Limited (Proposed ASX: AR1)
Financial Services Software Company, ARMnet Limited, are proposing to list on the ASX on the 26th of February 2020. The company is looking to raise A$11m, at an issue price of $0.20. Following listing, the company reports their expected market capitalisation will be between approximately $26m – $28.5m.
The company offers integration platform as a service (iPaaS), directed at financial services companies, including non-bank mortgage lenders, insurers, and funds management. Essentially this means that ARMnet’s technology links up a client’s operating platforms and integrates them in an effort to save the client time and money, as the platform may reduce the need for CRM, financial reporting, and asset protection platforms, just to name a few. Additionally, upon listing, the company is set to become the parent company of Axcess Consulting, an established global iPaaS provider.
Axcess Partnership have recorded strong revenue growth from FY17 to FY19, increasing from approximately 2.25m to almost 5m. Consequently, most of the capital raised by ARMnet will go to the acquisition of Axcess Consulting at a price of $4m.
The company has identified some risks in their operations, noting that the skills and experience of Axcess’ senior staff is pertinent to their continued success. Additionally, and somewhat inherent in subscription-based recurring revenue models, there is a chance that current clients do not renew their contracts or decide to leave early. Lastly, and not uncommon for tech companies, there is a real risk that copycats could attempt to replicate their model and subsequently steal current future clients.
Emerald Clinics Limited (Proposed ASX: EMD)
Specialist medical provider, Emerald Clinics Limited, are proposing to list on the ASX on the 7th of February 2020. For an issue price of $0.20, the company is looking to raise $8m from the listing.
Emerald Clinics hold a collection of medical centres, with single clinics situated in both WA and Victoria, and two in NSW. They focus on cannabinoid-based medicines for patients who have exhausted other, more traditional, treatment options. Additionally, they collect data from consenting patients regarding the outcomes of such relatively new treatment options, something that could assist the greater global medical-cannabis industry.
The company has only been in operation since December 2018 and as such, there is limited financial history. This also means that there is uncertainty around the company’s future revenues and whether they can achieve profitability. The company is currently running at a loss and will spend the majority of the capital on existing clinic operations. As medical cannabis treatments are a relatively new alternative treatment in Australia, there is also a risk that the regulators could change the environment that Emerald are operating within.
Little Green Pharma (Proposed ASX: LGP)
Medical cannabis manufacturer, Little Green Pharma, are also looking at a listing date on the 7th of February, at an issue price of $0.45. Upon completion of the IPO, the company estimate their market cap to be approximately $55m.
The WA-based company, along with their manufacturing and distribution partners, produce medical cannabis, with their operations encompassing cultivation, production, and R&D. They have been in operation since 2016 and were the first Australian company to produce locally grown medicinal cannabis.
While they have been around longer than a lot of other medical cannabis producers, they have run at a loss for the past three financial years, suggesting that the company needs working capital.
Similar to Emerald Clinics and other medical cannabis companies, there are regulatory risks associated with non-renewal or cancellation of their import and export, and medicinal cannabis licenses.
Thedocyard (Proposed ASX: TDY)
Law-tech company, thedocyard, are proposing to list on the 14th of February. The company is looking to raise $5m at an issue price of $0.20, giving the company an estimated market capitalisation of around $26-27m, depending on subscription amounts. The company has indicated that the use of funds will be primarily for customer acquisition, followed by product development and marketing activities respectively.
Offering software as a service or SaaS, thedocyard offers a cloud-based collaboration tool for the entire process involved in corporate or commercial deals. Since operation, they have facilitated over $12b in deal value. Key clients for the company range from investment banks and funds, to law firms and corporate counsels.
While the company’s revenue has more than doubled from FY18 figures of approximately $245k to over $550k in FY19, they still ran at a loss over those two years, prompting uncertainty about when or if the company will become profitable in the near future.