Quantify, WHL in backdoor listing deal

Perth entrepreneur Mark Lapins is aiming to defy waning investor interest in tech startups, announcing plans for a backdoor listing that values his ‘internet of things’ firm, Quantify Technology, at $22 million.

Quantify is planning to list on the ASX via a reverse takeover of one-time oil and gas explorer WHL Energy, which is run by dealmakers Gary Castledine and Neville Bassett.

The deal has been announced at a time when investor interest has swung away from tech stocks to the mining and exploration sector.

As a result, at least eight Perth-based companies, including Spectrum Rare Earths, Fe, Metallum, Azonto Petroleum, Victory Mines and Capital Mining have cancelled reverse takeover deals with tech firms this year, according to data compiled by Business News.

That was after a wave of backdoor listings were completed in the first half of 2016, with the most recent being the listing of Israeli firm Weebit-Nano via Radar Iron in early August.

Quantify was founded in 2012 by Mr Lapins, who specialises in the field of internet protocol (IP) communications technology.

Its lead product, known as the Q Device, is designed to monitor, assess and manage objects in the physical world electronically, and to optimise the performance of systems and processes to create ‘intelligent’ buildings.

Its initial focus is on enhancing the energy and environmental efficiency of commercial buildings.

The Q Device is undergoing testing, with Quantify targeting a market launch in the second half of 2017.

WHL, which currently has a cash balance of $2.1 million, is planning to raise at least $3.5 million as a pre-condition of the deal going ahead.

It has appointed Westar Capital as lead manager of the capital raising.

Mr Bassett, who is principal director of Westar, and Mr Castledine, who was previously a director of CPS Capital Group but now operates in a private advisory capacity, were appointed directors of WHL in February.

WHL plans to issue 250 million ordinary shares, at a deemed price of 6 cents per share, and 120 million performance shares to the current owners of Quantify, valuing the business at $22.2 million.

Conversion of the performance shares is subject to a series of hurdles, including technical certification of the company’s wall switch and power outlet, known as the retrofit switch, and an associated wireless card.

If the company achieves total orders of $15 million over 54 months, all of the performance shares will convert.

Quantify’s current shareholders are led by Mr Lapins, who has a 45 per cent stake.

Mr Lapins has been managing director of Quantify since December 2013.

His past experience includes running Vieo Systems, which was acquired by global company Schnieder Electric in 2008.

Quantify’s board is led by chairman Aidan Montague, whose past experience includes chairing Panorama Synergy and before that being a Cisco executive.

Once the Quantify listing is completed, Mr Lapins will be paid an annual base salary of $365,000 and Mr Montague will be paid $260,000 a year.