Caitlin Fitzsimmons Online editor

Caitlin covers social media, marketing and technology and is BRW's social media editor. She has worked as a journalist in Sydney, London and San Francisco, writing for titles including The Guardian and The Australian Financial Review.

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Why the technology entrepreneurs behind Bulletproof used a reverse takeover to list on ASX

Published 23 January 2014 11:42, Updated 24 January 2014 09:50

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It is possibly the 21st century Australian equivalent of swords to ploughshares: a technology company doing a reverse takeover of a mining company.

While there has been a lot of focus on initial public offerings in the technology space lately, with high-profile floats such as Matt Barrie’s Freelancer.com, the founders of Bulletproof Networks opted to list on the Australian Securities Exchange via a reverse takeover of mining company Spencer Resources instead.

The company is now on the ASX with the ticker BPF, opening on Thursday at 50c and falling to 41c by 11am.

Bulletproof started in 2000 as a managed IT services provider and shifted into cloud computing in 2006. The company was on the BRW Fast 100 in 2013 with 60 per cent growth in revenue.

Anthony Woodward (pictured) and his co-founders will own about 73 per cent of Bulletproof Networks after a reverse takeover of a mining company to list on the ASX.

Bulletproof chief executive Anthony Woodward says the company decided for the reverse takeover strategy rather than an initial public offering because it only needed to raise $1.6 million. However, the capital raising was over-subscribed and the company actually raised $2.85 million.

“We didn’t want to go an IPO because the amount of capital we needed to raise was low because we’re already a cash-flow business... and also Spencer Resources had a ready-made register of shareholders so we didn’t have to go out and find new shareholders,” Woodward says.

“Our motivation for becoming listed was to take advantage of the opportunities in the cloud services market in Australia.”

He adds that the ASX listing would enable Bulletproof to raise capital when needed and was also important from a sales and marketing perspective because many corporate customers prefer to deal with a listed company.

As a public company, Bulletproof will be about 73 per cent owned by the seven shareholders who owned it as a private company, after various performance incentives kick in over the coming months. Five of the seven are part of the c-level team, while two are not involved in the business.

Woodward welcomes the news that the Australian government is reviewing the rules around employee share schemes. He found it too complex and expensive even before the 2009 changes to the tax treatment of employee share schemes.

“We did look at share option schemes some years ago and we found they were quite costly and complex to run and maintain and regulatory-wise quite complex to set up,” Woodward says. “It’s certainly welcome news that the government is looking to help smaller businesses to incentivise in that way because when you’re a smaller business, you can’t always compete on the wages prevailing in larger companies.”

However, he does not plan to join the exodus of start-ups leaving Australia to set up in markets with more favourable tax regimes and government incentives.

“We certainly plan to stay in Australia. We feel that the cloud services market in Australia has a long way to run and is moving from an early adopter phase to early maturity,” Woodward says. “It hasn’t been a high priority because Australian organisations do value dealing with an Australian cloud services provider because we’re in the same time zone and the data is hosted locally.”

Bulletproof is not the only company using the reverse takeover strategy to list on the ASX.

Perth-based financial services cloud technology provider Decimal is planning a backdoor listing in April via a reverse takeover of mineral exploration company Aviva.

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