Here’s what they are saying
Australia’s QANTM Intellectual Property became the latest IP legal services provider to go public today after its debut on the Australian Stock Exchange (ASX). For some, its impressive performance will be seen as further evidence that the initial public offering (IPO) is an appropriate vehicle for trademark practice – though it is yet to be seen if it will gain wider adoption outside of Australia’s vanguard market.
QANTM houses Australian IP boutique law firm Davies Collison Cave (DCC) and attorney firm FPA (formerly named Freehills). Davies Collison Cave was ranked top-tier in Australia for both trademark enforcement and litigation, and trademark prosecution and strategy, in the most recent edition of the World Trademark Review 1000. Stock in the holding company began trading under the QIP ticker on the ASX at midday local time today, rising from a starting price of A$2.22 per share to close at $2.50 – an increase of over 12%. In total, the IPO raised $146.7 million, delivering a valuation of $295.1 million.
The company concurrently released its annual results for 2015-2016, with total revenue up 10.3% year-on-year to $107.1 million and pre-tax earnings up 27.3% to $26.6 million. Chief executive Leon Allen stated that he was “pleased to announce that QANTM has delivered FY16 results ahead of the company’s prospectus forecast, reflecting the hard work and commitment of our team and the delivery of great results for our clients”.
As to the benefit for the specific firms, he added: “The IPO is an exciting milestone and will provide both DCC and FPA with increased financial flexibility to pursue selective and complementary acquisitions and to retain and attract high-quality people.”
While DCC is clearly a major player in trademark law on home soil, its growth potential in relation to neighbouring Asia-Pacific jurisdictions is likely a major factor in attracting such significant interest from both institutional and retail investors. “Australia as a mature market has seen filings grow at 3-4% per annum [20-year annual compound growth rate], but Asian filings are growing at 11% per annum, effectively underwriting top line growth,” broker Evans & Partners told its clients in the run-up to QANTM’s ASX listing.
QANTM is the latest of several Australian IP services-focused companies to go public. Earlier this week, ASX-traded Xenith IP Group also reported its results for the past year, with forecast-beating revenue growth of 19% on 2015. IPH is another ASX-traded IP service provider – and also an owner of another WTR 1000 top-ranked firm, Spruson & Ferguson – which appears to have benefitted from substantial exposure to Asian markets, experiencing a stock price increase of over 150% during the course of 2015.
Despite these impressive figures, it is still early days for the publicly traded IP legal services model. How these firms fare over the longer term remains to be seen; another Australian legal services holding company, ILH, entered administration in December 2014, underlining that this kind of set-up is not without its risks. There are also question marks over the wider uptake of the model in other jurisdictions; companies following the QANTM blueprint will also need to do more to allay concerns that their need to deliver shareholder-friendly growth, often through acquisitions, could create conflicts and come at the expense of client interests. For now it is a case of ‘watch this space’.
