Anvil Partners LLP devised a novel pre-IPO structure coupled with an AIM Admission for its client Phynova Group plc. The transaction involved raising a pre-IPO round which was held in escrow pending the AIM Admission. The completion of the funding stage in advance of the work on the AIM Admission gave the professional advisers the confidence that their costs would be met.
The funding came from private investors who were attracted to the issue because, although it was structured and priced as a private equity round, it guaranteed the investors AIM traded shares, or their money back, with interest. One of the complaints of private equity investors is that many of the pre-IPOs they invest in never materialise into IPOs. The structure also effectively gave private investors the opportunity to invest in an IPO, a rarity these days, except where the services of Sid are required for a privatisation. Investors in the pre-IPO can qualify for EIS relief which should ensure that they will remain holders for the medium term, at least.
The structure necessitated navigating some tricky paths that are not well trodden, relating to the dissemination of information and visiting the safe harbours within the new Financial Promotions Order of the Financial Services and Markets Act of 2000 and the Prospectus Directive. We now have a template in place for other companies which are seeking development finance and are interested in pursuing this route, as the institutional funding for such deals is still very difficult.
