Marketing an ASX IPO to investors during a pandemic, when offices were shut and people worked from home, had never been done. Ward recalls having at least 50 Zoom meetings with institutional investors in Australia, New Zealand and other time zones.

“The online meetings worked well,” says Ward. “We were pleased by the strong interest from Australian institutional investors towards healthcare companies.”

Ward will meet several Aroa shareholders in person for the first time this year when he travels to Australia. He has a good story to tell. In April, Aroa announced its FY21 product revenue slightly exceeded prospectus forecasts, despite fewer hospital procedures during COVID-19.

Also in April, Aroa received clearance from the US Food and Drug Administration for Myriad Morcells, a powder that works with Aroa products to quicken tissue regeneration.

Aroa’s IPO was more than a decade in the making. Ward founded the company in 2008 to develop Endoform, its platform technology that provides a shortcut to growing new tissue and associated blood supply at lower cost, supporting recovery from injury and surgery.

Aroa is part of a new breed of NZ companies choosing a sole listing on ASX through an Australian IPO. Sole listings in the past few years include Happy Valley Nutrition (ASX: HVM), Laybuy Group Holdings (ASX: LBY), Keytone Dairy Corporation (ASX: KTD), and Straker Translations (ASX: STG).

In all, 18 of 63 NZ companies listed on ASX have a sole listing on the Australian exchange[1]. The rest are dual-listed on NZX and ASX (some listed on ASX through the NZ Foreign Exempt provision, which makes it easier and cheaper for NZ companies to list in this market).

The best known of them is Xero, the NZ accounting software star that transitioned to a sole listing on ASX in early 2018 after previously being dual-listed on NZX and ASX.

ASX asked Brian Ward why Aroa chose to sole list on ASX through an IPO and the company’s experience since listing. Here is an extract of his response.

ASX: Brian, what were the main factors behind Aroa’s decision to list on ASX?

Brian Ward: Aroa started thinking about an IPO about three years before its listing. We’d raised private equity and proven different parts of the business. An IPO was a natural evolution to raise more capital and fund growth as Aroa became more successful. We wanted to raise enough capital to allow Aroa to focus on commercialising its technology over the next few years.

We saw a strong group of early-stage life science companies on ASX. Also, there was a clear peer group of companies for Aroa through Avita Medical (ASX: AVH), Polynovo (ASX: PNV), and Next Science (ASX: NXS). Australian institutional investors in the healthcare sector were familiar with soft-tissue regeneration technology.

Greater capital-market depth in Australia was another factor. Having access to a larger capital pool in Australia is valuable if Aroa needs more capital to fund its global growth strategy.

ASX: Why did you choose a sole listing on ASX rather than a dual listing?

BW: There was strong interest in Aroa from Australian institutions in our pre-IPO roadshow in February 2020. When COVID-19 struck, Aroa withdrew its revenue forecast and we thought our IPO, like most others, might be shelved for 12-24 months. But Australian institutions remained interested in Aroa, which encouraged us to proceed with the IPO.

Simplicity was another factor. Given COVID-19 uncertainties, we wanted to get the IPO done and knew we had sufficient support from Australian institutions for an ASX listing. It took a lot of work, but listing on ASX was a much more straightforward process than I thought it would be.

Aroa hasn’t ruled out a dual listing on NZX. We are proudly a NZ company and it might make sense to dual list in NZ at some point. But for now, a sole listing on ASX, and being part of a group of life science stocks with technology in our field, makes sense.

ASX: What’s been Aroa’s experience since listing?

BW: It’s been positive. Two Australian broking firms (Wilsons and Bell Potter) are researching Aroa (they were joint lead managers on the IPO). Getting quality research coverage from biotechnology analysts was an important factor in Aroa’s decision to list on ASX.

Our share liquidity was strong in the first six months after listing (daily turnover was 300,000 to 500,000 shares) but has since dropped back (around 100,000 daily share turnover). Part of that is due to the release of shares from voluntary escrow for some pre-IPO investors in Aroa.

Building higher liquidity in Aroa is one of our main investor-relations goals. It’s been difficult during COVID-19 because the pandemic affected demand for the use of our products during hospital procedures. But we’re turning a corner as countries get through the pandemic.

Also, our shareholder base is approximately split 80/20 between institutions and retail investors. As Aroa grows, we’d expect to see new shareholders joining the register.

ASX: How important is index inclusion for Aroa?

BW: Aroa (capitalised at $340 million[2]) is part of the S&P/ASX All Ordinaries index  (which represents the market’s 500 largest companies). We’d like to be part of the S&P/ASX 200 index one day as we build a world-leading soft-tissue regeneration company.

ASX: What advice would you give to other NZ life science companies considering an IPO?

BW: Every company is different. For some NZ companies, a listing on NZX or a dual listing on NZX and ASX makes sense. For Aroa and others, a sole listing on ASX is the way to go.

The big eye-opener for me was the amount of support from Australian institutional investors for emerging NZ healthcare companies. Aroa might have listed a few years earlier on ASX had we recognised the level of Australian interest in our technology.

Logistics was another learning. There’s not a lot of difference being based in Auckland, Sydney, or Melbourne if you are an ASX-listed company. We have close proximity to Australia, so it’s easier to travel there to meet investors or have meetings via Zoom.

ASX: How did ASX help Aroa during and after its listing?

BW: ASX has been incredibly supportive. We got a lot of help during the listing process, particularly from ASX’s Auckland office. We’ve also presented at the ASX Small and Mid-Cap Conference to raise awareness of Aroa and get the message out to investors.

ASX: On a personal note, how have you found running a listed company for the first time?

BW: I’ve really enjoyed it. I like the interaction with institutional investors. Obviously, listed companies require a lot more disclosure and compliance, but that’s part of the job. I probably spend 20 per cent of my time on investor relations and listing-related issues, but there hasn’t been a big change to Aroa in terms of its day-to-day operations.

What I like most is that Aroa completed a significant capital raising through ASX that allows us to focus on the operational side of the business. When your company is unlisted and relying on private capital to survive, you have to focus more on your next capital raising.

Aroa has great technology, a great team, and a strong opportunity in a global market for our products. Following the ASX listing, we have sufficient capital to get on with the job of building a much larger business and making a difference by helping more people recover from injuries and surgeries through our products.

More information on Aroa Biosurgery is available here

[1] At May 21, 2021.

[2] Morningstar. At June 4. 2021.

Where to now? 

For more information contact ASX Listings Business Development