QANTM to Go Public in $295m Deal
Overall the IPO offers and attractive mix of capital growth and income.
QANTM Intellectual Property Ltd is an Australian legal services firm focused on Intellectual Property (“IP”) rights. QANTM offers a suite of IP related services associated with protection, creation, commercialisation and management of IP rights such as patents, trade marks, copyrights or trade secrets. Upon listing QANTM will own the two IP firms David Collison Cave (“DCC”) and FPA Patent Attorneys (“FPA”).
QANTM has been profitable for the past three financial years and achieved average revenue growth of 8% pa. Income streams are highly diversified with the top 20 clients accounting for 20% of revenue. Synergies arising from combining DCC and FPA could drive margin growth and unlock value from the existing customer pipeline, while management forecasts a dividend distribution yielding 4.9% for FY17.
However, the company faces integration risks as two large industry participants are being combined. The historical financial reports are presented on a pro forma basis and there is no guarantee synergies will materialise. QANTM is subject to increasing competition in the sector and there is a high degree of free float which may impair early trade in its shares.
DCC and FPA have a long standing track record of profitability and cash flow generation and continuation of this trend should enable management to reward shareholders via dividends. Overall the IPO offers and attractive mix of capital growth and income.
Company: QANTM Intellectual Property Ltd
ASX Code: QIP
Shares on Offer: 14.3m
Listing Price: $2.22
Market Capitalisation: $295.1m
Listing Date: August 31
Author: Simon Herrmann
Aug 29, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.