Why Time to Act chose the Aquis Stock Exchange over venture capital
Green tech engineering firm Time to Act floated on the Aquis Stock Exchange this morning (Wednesday) in a boost to London’s ailing listed tech sphere.
Aquis was designed as a primary market with a specialised regulatory environment to aid small and medium sized business growth.
It admitted 16 new companies last year, the most of any growth exchange in the UK, but this is the exchange’s first IPO of 2024.
Although small, Time to Act’s IPO will be warmly welcomed by capital markets insiders as it’s a sign London’s equity markets aren’t completely dead just yet.
The Teesside firm, which operates in what it calls the “energy transition supply chain,” issued nearly 14m shares at a market capitalisation of roughly £6.9m.
In its first morning of trading, shares for Time to Act changed hands at a small spread around 50p.
Talking to Morning Wire shortly after his firm went public, Chris Heminway, Time to Act’s executive chairman, said: “We’re IPO-ing because we want to bring ourselves to the attention of public markets and new investors.
“It will also help us to de-bottleneck some areas of the business… like engineering resources, technical resources and people resources.”
Time to Act has two principal divisions. Its Diffusion Alloys business makes a metallic coat that helps reduce the corrosion of metals involved in high-temperature industrial processes.
Greenspur—its second business—is a patented tech business developing a new type of generator for the wind turbine industry that dispenses with the need for rare earth magnets and copper coils.
VCTs don’t ‘have much of a clue’
With its tech focus and current size, a public listing is an unusual next step for a firm like Time to Act. Most peers at a similar stage and scale would have opted for funding through venture capital.
However, the company was established in 2019 through a merger of its two businesses with the explicit intent of going public.
Heminway said of its approach: “We’ve done friends and family funding, we’ve done EIS funding, the next natural place would be to go to VCT [venture capital trust]. And personally, I don’t think the VCTs have much of a clue as to what they’re doing, let a lone in the engineering space.
“We set the business up to hop straight over the VCT investors and go to public markets. And because we have cash on our balance sheet, we can go now.”
The firm said it expected topline revenue growth of 50 per cent per annum and was profitable for the first time in 2023.
As of 31 March 2024, it had £1.9m in cash reserves and said it could raise £1m from the IPO.
But Heminway said Time to Act’s IPO was done on the basis of its current balance sheet. “We didn’t need a big funding requirement to keep us liquid. We have at least 12 months of liquidity on our balance sheet.
“But we have come to market with the IPO in the expectation that we will come back and raise some money.”
Balance sheet the focus with acquisitions on the horizon
Heminway opened the door to more acquisitions of businesses that “fit within the portfolio” of clean technology in the future.
He added: “They will probably be – over time – a mix of cash dependent and cash generative profitable businesses.
“But because the funding markets in the UK is so broken at the moment, I’m expecting to be inundated with offers to buy little start-up technology businesses that can’t get their own funding.
“We will be very, very careful about dipping into those. It’s not our job to be bailing out small technology entrepreneurs who start up businesses that can’t find their own funding.”
Heminway confirmed any future acquisition will be funded through shares rather than cash.