X2M Connect IPO: What does public offer hold for New Zealand residents?

Highlights 

  • X2M Connect is an Australian Internet of Things firm, emphasising digitising the utility sector in the APAC region.
  • The Company is offering up to 32 million shares at $0.25 a share to raise nearly $8 million.
  • X2M plans to commercialise the Company’s technologies through increased market penetration and new jurisdictions.

X2M Connect is an Australian tech firm in an Internet of Things (IoT) business that has a preliminary emphasis on the digitisation of the utility sector in the APAC region with its exclusive technology. The Group helps in facilitating both new and existing utility devices like utility meters or sensors to communicate with each other and a central system through the internet.

The Company is planning to get listed on the ASX. It is looking to raise a minimum of $6,000,000 and a maximum of $8,000,000 by issuing shares at a price of $0.25 per share.

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The key purpose of the offer is to provide and utilise funds to carry out all business strategies of the Company in a cost-effective manner. Additional capital can help X2M in the commercialisation of the Company’s technologies by increasing market penetration in its current jurisdictions, expand in its initial market entry in China, and also expanding into new target jurisdictions.

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The funds raised will also help the Company in getting future access to equity capital markets and also in satisfying admin costs and working capital.

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Bella Potter Securities will act as the lead manager to the Offer.

Key advantages of investment to NZ investors

X2M has completed its initial development phase and is showing substantial growth and competitive advantages in its markets. Further, a significant amount of funds has been invested in the development of the Company’s operational IoT platform. This technology also has broad applicability to other industries in the APAC market, implying the significant growth potential of the firm.

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The Company also undertook some exploration work previously to expand its offerings to markets like India, the Philippines or Vietnam. X2M begins with a due diligence process to ensure it understands and meets local regulation needs as well as other entry obstacles.

Associated risks to be considered

There are significant risks that the infrastructure and technology solutions provided may be flawed, not functional or unable to meet customer expectations. Key business processes could be disturbed by the events that are outside the company’s control like system failures, system infrastructure disruptions or even natural disasters.

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There can be difficulties in market tolerance for X2M’s products as the price of the Company’s products are high, especially in the APAC region. Customers can go for cheaper products instead.

There is also a risk like product offerings not fulfilling the market needs, the regulation requirements, etc., if the firm enters new markets.

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The COVID-19 outbreak is affecting global markets, subsequently, the nature and the extent of the pandemic on the Company’s performance remain undetermined.

Outlook

The Company has not forecasted future earnings, provided the current status and nature of the Company’s business. The Company has stated that preparing a reliable best estimate prediction is not a likelihood due to the possibility of a wide range of probable results.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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