Sydney-based tech company Yatango has announced it will list onto the ASX via a reverse takeover of Latitude Consolidated Limited and hopes it will raise at least $6 million in the process.
Since the announcement Latitude stock has risen by more than 110% to $0.019 a share.
Founder Andy Taylor said at the ASX is the right platform for the company, which currently has monthly revenue of around $1 million.
It has two core business areas – mobile and shopping – and 175,000 registered users. Yatango Mobile is a network provider which runs on the Optus 4G network and enables members to save money by building their own plan on a no-contract basis. Yatango Shopping is a marketplace which aims to deliver better prices on goods to consumers.
“We are building a consumer brand and Australia is our home market. The ASX is the right option for us at this stage of our evolution,” he said.
In the past year there have been dozens of tech companies reversing onto the ASX, often using defunct mining shells.
It’s a process which has worried tech industry heavyweights, including Atlassian co-founder Mike Cannon-Brookes who labelled it as “almost always a bad idea” and “a sign they couldn’t raise real capital”.
Shark Tank judge Steve Baxter also isn’t a fan of reverse takeovers. He recently told Business Insider while the ASX is a solid place to raise capital the increasing number of backdoor listings isn’t a good thing.
Taylor said reverse takeovers have had a bad wrap because many haven’t had solid businesses behind them.
“It’s the less riskier approach, we found a great shell with great shareholders in it,” he said. “For us it was timing, de-risking as much as possible and a front door was going to take a bit longer.”
Before launching Yatango in March 2013, Taylor was one of the co-founders of peer-to-peer lender SocietyOne in 2011.
The company is also considering launching a money vertical later this year, which would include a debit card and line-of-credit financial product.
“We have a long-term business plan that is focused on building an ecosystem of tightly integrated consumer services around the world… Investing in growth is key, while continuing to show incremental growth in quarterly revenues,” Taylor said.
The listing will be led by Fosters Stockbroking and Azure Capital. If due diligence, currently underway, is satisfied and the $6 million is raised the new entity will have net assets of about $8.1 million.
The funds will be used to fuel growth in Australia and launch in the US and UK.