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Organisations seeking to access the Australian capital market to fund commercialisation of technology or provide liquidity for shareholders may wish to consider proceeding by way of a backdoor listing on the Australian Stock Exchange.
The first requirement for a backdoor listing is to identify a suitable listing vehicle, preferably a listed company which has accumulated cash from divestments and has existing shareholders who are accepting of technological risk. The technology can then be sold into the listed vehicle (either by an asset or share sale) in return for cash, equity in the listed vehicle or a combination of the two.
Where additional funds are required for effective commercialisation, the listed vehicle may conduct a capital raising, either at the time the listing is effected or subsequently. If the nature of the technology being moved into the listed vehicle will mean a change of business activities for that company, the ASX will probably require prospectus style disclosure to be made in connection with obtaining the consent of existing shareholders to the company's change of direction.
The process of effecting a backdoor listing can take between two and four months. The interests of quite a number of stakeholders need to be taken into account and the process would normally involve due diligence being conducted on both the listed vehicle and the technology business. The documentation required to effect the transaction is also more complex than that required for an IPO. Nevertheless, this can be an effective approach to raising capital and achieving a listing.
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