Inside Australian Family Lawyers' $6.5M IPO

Written on the 9 April 2019 by David Simmons

Inside Australian Family Lawyers' $6.5M IPO

At the completion of Australian Family Lawyers' (AFL) IPO it will become the latest Australian law firm to list on the ASX.

Following yesterday's extraordinary general meeting when Navigator Resources Limited (ASX: NAV) shareholders gave AFL the greenlight for a reverse takeover of the mining company.

The firm is joining the likes of Slater & Gordon (ASX: SGH) and Shine (ASX: SHJ) as a listed company and is choosing to list via the backdoor.

Navigator, an Australian mining company, will then become AF Legal at the completion of the $6.5 million IPO and the acquisition of the law firm.

According to an ASX spokesperson, there were 21 backdoor listings in 2018 compared to 31 in 2017. This year there has only been one so far, not including AF Legal.

Bell Potter, the lead manager of AFL's IPO, has advised that the they have already received firm commitments in excess of the $4 million minimum offer size ahead of yesterday's IPO launch.

AFL is a relatively young firm which makes the decision to list all the more intriguing. The company was founded in 2016 by Edward Finn (pictured, managing director) and provides advice to clients with regard to divorce, separation, property and children's matters.

According to AFL's prospectus the company has revenues of $4.8 million in FY18 up by 86.9 per cent in FY17. During FY19 EBITDA has grown over 27 per cent.

The firm hopes that by listing it can become the largest provider of family law services in Australia and secure the largest segment of the $1.1 billion family law market.

If AFL hits the roof of the IPO the firm will have a market capitalisation of around $12.6 million.

Following the IPO Navigator will acquire 100 per cent of AFL which will value the combined company at $10.6 million.

In comparison, fellow listed legal firms Shine and Slater & Gordon have a market cap of $117.75 million and $138.36 million respectively.

AFL will also join intellectual property law giants Xenith IP Group (ASX: XIP), QANTM Intellectual Property (ASX: QIP), and IPH (ASX: IPH) on the ASX.

On completion of the transaction it is anticipated that two of the current directors of Navigator will resign, and one nominee from AFL (most likely Edward Finn) and another non-executive director will join the Navigator board.

The IPO is the realisation of AFL's backdoor listing which began in earnest on 19 December 2018 when Navigator announced its decision to acquire AFL and change the nature of Navigator's business.

The board of Navigator says that it has assessed its own business and determined to leave the mining sector in Western Australia a listed law firm is expected to generate cash for the company.

AFL opened its first office in Melbourne where its head office is. In January 2017 a second office was opened in Sydney which remains in its infancy. Subsequently AFL opened offices in Werribee (VIC) and Frankston (VIC).

The law firm intends to open more offices in Sydney, Brisbane, and the Gold Coast.

As of September, 2018 AFL employed 17 staff, including 15 lawyers.

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Business News Australia

 
Author: David Simmons

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