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Monday 11 June, 2018

Aquis Exchange PLC

Placing and Proposed Admission to Trading on AIM

RNS Number : 8630Q
Aquis Exchange PLC
11 June 2018
 

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, SINGAPORE, HONG KONG, THE REPUBLIC OF SOUTH AFRICA, OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This Announcement is not an admission document or a prospectus and should not be construed as an offer or form part of any offer to sell or issue, or solicitation of an offer to purchase or subscribe for, any of the securities mentioned in this Announcement nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. In particular, these materials are not an offer of securities for sale in the United States. Investors should not purchase any shares referred to in this announcement except on the basis of information in the admission document (the "Admission Document") issued by Aquis Exchange PLC ("Aquis" or the "Company") in connection with the proposed admission of all of its ordinary shares ("Ordinary Shares") to AIM, a market operated by the London Stock Exchange plc ("Admission").  A copy of the Admission Document will, following publication, be available for viewing on the Company's website at http://www.aquis.eu/, subject to applicable securities laws or regulations.

 

 

11 June 2018

 

AQUIS EXCHANGE PLC

 

("Aquis" or the "Company")

 

PLACING

AND

PROPOSED ADMISSION TO TRADING ON AIM

 

Aquis Exchange PLC, the independent, pan-European equities exchange operator and technology service provider, today announces its initial public offering by way of a conditional placing of 4,460,967 new and 7,456,014 existing ordinary shares of 10p each ("Ordinary Shares") at 269 pence per Ordinary Share (the "Placing Price") to raise gross proceeds of approximately £32.1 million (the "Placing").

Liberum Capital Limited is acting as Nominated Adviser, Sole Corporate Broker and Sole Bookrunner in relation to the Placing.

Highlights:

·     Based on the Placing Price, the market capitalisation of the Company on admission to trading on AIM ("Admission") will be approximately £73.0 million.

·     The Company has conditionally raised £12.0 million (before expenses) pursuant to the Placing.  

·     Selling shareholders will receive gross proceeds of approximately £20.1 million pursuant to the Placing. Selling shareholders consist of the Warsaw Stock Exchange, certain Directors and current and former employees and other investors.

 

·     The net proceeds of the Placing will be used by the Company as follows:

increase investment in sales and marketing to grow the number of Members on Aquis Exchange and their activity levels;

accelerate the software licensing capabilities with enhanced delivery and support;

invest in new technology developments;

cover the costs of its admission to AIM and maintain the applicable governance standards; and

general working capital purposes.  

·     On Admission, the Company will have 27,149,559 Ordinary Shares in issue and a free float of approximately 84 per cent.

·     Admission and commencement of dealings in the Ordinary Shares under the ticker AQX are expected to take place at 8.00 a.m. on 14 June 2018.

·     The Company's ISIN is GB00BD5JNK30 and its SEDOL is BD5JNK3.

Alasdair Haynes, Chief Executive Officer of Aquis Exchange, said:

"We are delighted to list Aquis Exchange on AIM. Aquis is disrupting the European trading landscape with a unique operating model underpinned by subscription-based pricing and a compelling offer to traders which combines good liquidity with market-leading low levels of toxicity.

There is a clear regulatory drive for greater transparency in trading and a requirement for market-users to show they are using the best possible venue. Aquis is ideally positioned to capitalise on these trends in the years to come. We look forward with confidence and optimism as we begin life as a listed company."

The Company will also today publish its Admission Document on its website at http://www.aquis.eu/.

Capitalised terms used in this Announcement shall, unless the context provides otherwise, have the same meanings in the Admission Document.

The full terms and conditions of the Placing are set out in the Admission Document.

 

ENQUIRIES

 

 

Aquis Exchange PLC

Alasdair Haynes, CEO

Jonathan Clelland, CFO and COO

 

Tel: +44 (0) 20 3597 6321

Liberum Capital Limited (Nominated Adviser, Sole Corporate Broker and Sole Bookrunner)

Clayton Bush

Chris Clarke

Jill Li

Kane Collings

 

Tel: +44 (0) 20 3100 2000

Finsbury (Financial Public Relations)

Alastair Hetherington

Michael Turner

Alexander Gorokhov

Tel: +44 (0) 20 7251 3801

 

BACKGROUND TO THE COMPANY

History and Development

The Company was founded in 2012 by Alasdair Haynes, the former CEO of Chi-X Europe before its sale to BATS in late 2011. The Company was created as part of a vision to introduce competition and innovation to the securities trading market. The Company received approval from the FCA in November 2013 and commenced European equities trading in November 2013.

Business Overview

Aquis operates through three defined divisions: (i) Aquis Exchange, (ii) Aquis Technologies and (iii) Aquis Market Data.

The Company's revenue consists of: (i) membership fees in respect of Aquis Exchange. Members are charged a monthly subscription fee based on the numbers of trading messages submitted on average during the month; (ii) licencing and other fees in respect of Aquis Technologies; and (iii) (from 1 July 2018) market data fees from the supply of Aquis market data to market data vendors.

1. Aquis Exchange

Aquis Exchange is a cash equities trading venue with a unique subscription-based pricing model based on electronic messaging traffic. Its principal competitors are the national exchanges such as the London Stock Exchange and Deutsche Börse, and Cboe (BATS Chi-X Europe) which charge customers on a per transaction model. Since the Company commenced trading in 2013, its market share has grown to reach approximately 1.9% of the overall pan-European market of continuous trading.  As at 10 June 2018 Aquis Exchange offers trading in approximately 1,200 equities in Europe across 14 countries. As at 10 June 2018, Aquis Exchange had 28 Trading Members (including ten of the world's leading investment banks) and six market makers acting as designated liquidity providers ("DLPs").

The client base of Aquis Exchange consists principally of investment banks and brokers acting on behalf of institutions such as pension funds and asset managers. The Company's members are able to trade European securities on a 'lit' market. This means that the dealing price prior to the trade is transparent to the whole market. This is in contrast to pricing on dark and grey markets, where price discovery is only available to the market post-trade.

Aquis Exchange's unique pricing model charges users a fixed monthly fee for a set or unlimited amount of usage which is based on message count rather than basis points on value traded, the model employed by the Company's competitors.  Aquis Exchange is the only major Multilateral Trading Facility ("MTF") or exchange in Europe which utilises a subscription pricing model. The Directors believe that the model should materially reduce customers' explicit costs of trading relative to trading on the incumbent exchanges, and the more a Trading Member trades on Aquis Exchange, the bigger its savings.

The Directors believe that another key differentiator of Aquis Exchange from other trading venues is its policy to prevent aggressive trading by proprietary trading firms and that this rule has enabled the Company to create one of the lowest toxicity trading venues in Europe (1). The Directors also believe that this change should deepen the available liquidity that market makers are willing to offer at the best prices. This should mean that customers are able to transact more business in Aquis Exchange's lit environment before having to pursue alternative trading strategies in less transparent environments with less certain results.  In theory, this lower level of toxicity should ultimately save investors money, as the implicit cost of trading should be lower on Aquis Exchange than on other more toxic trading venues (i.e. trading venues where stock prices move at a faster rate). Indeed, the quality of the Aquis Exchange market seems to have resulted in investment banks and brokers steadily increasing their confidence and levels of trading.

2. Aquis Technologies

In addition to operating a pan-European MTF, the Company develops and licenses exchange and regulatory technology to third parties through its brand Aquis Technologies.  Aquis Exchange also utilises the technologies created by this specialist software arm.

The Directors believe the demand for high quality, efficient and cost effective exchange systems appears to be increasing due to European regulatory changes that are aimed at increasing transparency in markets and audit trails for all transactions, as well as a growing trend to allow competition between exchanges. The Directors hope to be able to exploit this growing demand. The Company does not own or license any patents and is not dependent on any licences, other than ''off the shelf'' or non-material software licences, to support its business activities.

3. Aquis Market Data

Market data is crucial for all market participants. The Company provides market data to Members and market data providers, which the Directors believe has the potential to become a substitutable data product in the future. Market data is a significant revenue contributor to the national exchanges. The Directors expect that Aquis market data should, in the next two to three years, be accepted by the market as an alternative to the national exchanges market data which should provide both considerable benefits to market participants and potential revenue generation for the Company. The initial step will be for the Company to charge for data from market data vendors, which is scheduled to commence on 1 July 2018.

 

KEY STRENGTHS

 

 

Subscription pricing model

A unique, fully transparent charging method. Aquis' subscription pricing model should materially reduce the cost of trading for participants relative to trading on the incumbent trading venues.

 

No aggressive proprietary trading and low toxicity

Aquis' policy to prevent proprietary aggressive trading has resulted in the creation of a significantly less toxic trading environment thereby reducing the implicit costs of trading.

 

Market Leading Technology

Custom-built, proprietary and has been designed to be highly scalable.

 

Growing Market Share

Volumes and market share doubled in 2017. The Company already has ten of the world's leading investment banks connected to and using the Company's platform, together with six major market makers acting as DLPs.

 

Market Opportunities - Regulatory Developments

Well positioned to benefit from the regulatory changes in MiFID II including the push for greater market transparency.

 

Strong Management Team

Significant experience in financial markets and the creation of alternative trading platforms.

 

GROWTH STRATEGY

The key strategic areas of focus for the Company are:

·     to capitalise on regulatory and technical shifts in market infrastructure by providing a trading venue which offers deeper liquidity and transparent, higher quality execution for intermediaries and investors;

·     to continue to increase the trading levels of the existing Members;

·     to increase the number of Members and associated trading volumes by providing a robust and innovative platform that responds to investors' needs, whilst maintaining a competitive pricing model; and

·     to license its technology platform to third parties that require trading systems, market surveillance or gateway technology.

During 2018 and 2019 the Company intends to focus on building its client base and trading activities in European equities. Given that a number of large investment banks are already Members and directing flow to Aquis Exchange, the Directors believe that the Company is well positioned to capitalise further on this.

In addition, the Directors believe that the available liquidity and continued investment in innovative products available to use on Aquis Exchange should drive material trading volume and market share increases.

The continued investment in the Company's technology supports the software licensing growth. The Company has created a suite of exchange products which have gained recognition for their quality and effectiveness. The Company intends to continue to focus on diversifying asset class capabilities and investing in brand and marketing to effectively promote and grow this activity. The number of suppliers of exchange industry technology is relatively limited and attendance at exhibitions and promotions, plus existing customer support and endorsements, suggests that the Aquis brand is gaining increased market reputation.

In the medium term, the Directors believe that the combination of a successful equities trading venue and thriving licensing business should offer the Company the opportunity to expand its activities internationally and develop trading venue activities in additional asset classes.

FINANCIAL INFORMATION

The Company's revenue increased from £1.2 million for year ended 31 December 2016 to £2.0 million in the year ended 31 December 2017 representing growth of 65 per cent. Aquis has invested significantly in the development and marketing of its trading platform and services and as result, the Company reported operating losses of £3.9 million and £3.3 million for the financial years ended 31 December 2016 and 2017, respectively.

DIVIDEND POLICY

The Directors intend to commence the payment of dividends when it becomes commercially prudent to do so. The payment of dividends will be subject to maintaining an appropriate level of dividend cover and the need to retain sufficient funds for reinvestment in the business, to finance the capital expenditure program and for other working capital purposes. Within these parameters, the Company's dividend policy will remain continually under review.

DIRECTORS

Nicola (Niki) Beattie - Independent Non-Executive Chairman

 

Niki Beattie is the non-executive Chairman of the Company and a member of the Nominations and Remuneration Committee. She joined the Board in January 2013.

 

Niki is also Chairman of XTX Markets Ltd, as well as a director of XTX Holdings Limited, and she is a non-executive director on the boards of Borsa Istanbul (Turkey), IRESS, a listed Australian financial technology company, and Kepler Cheuvreux UK Ltd. She was previously on the board of MOEX, Russia's exchange, from 2012-2016. Alongside these roles, she also sits on the Consultative Working Group to ESMA's Secondary Markets Standing Committee and is a member of the UK FCA's Regulatory Decisions Committee.

 

Niki is also founder of Market Structure Partners, a strategic consulting company advising market participants around the globe about structural changes in capital markets infrastructure. Prior to that she spent 17 years working in investment banking where she ultimately became managing director and head of EMEA Market Structure at Merrill Lynch International.

 

Alasdair Haynes - Chief Executive Officer

Alasdair Haynes is the Chief Executive Officer of the Company. He founded Aquis in 2012 after identifying the opportunity for providing a high quality equities exchange differentiated from all other exchanges through the introduction of a subscription pricing model and subsequently the introduction of a ban on aggressive trading by proprietary trading firms. Prior to founding the Company, Alasdair was CEO of Chi-X Europe. Alasdair, as CEO of the Company is responsible for the overall strategic development of the Company and has been instrumental in the expansion and strong organic growth of the Company.

Jonathan Clelland - Chief Financial Officer, Chief Operating Officer and Company Secretary

Jonathan Clelland is the Chief Financial Officer, Chief Operating Officer and company secretary of the Company. Jonathan joined the Company in 2012 when the Company was started and is responsible for all financial and administrative aspects of the Company. Prior to joining the Company, Jonathan was the COO of Shearman & Sterling (London) LLP and COO of HSBC Bank plc Corporate Finance and Advisory Division.

Richard Bennett - Senior Independent Non-Executive Director

Richard Bennett is a Non-Executive Director of the Company, Chairman of the Nominations and Remuneration Committee and member of the Audit, Risk and Compliance Committee (ARCC). He joined the Board in March 2014.

Richard was previously the Group Managing Director & Group General Counsel of HSBC Holdings plc. He was also a specialist adviser to the Parliamentary Commission on Banking Standards and the Treasury Committee.

Mark Goodliffe - Independent Non-Executive Director

Mark Goodliffe is a Non-Executive Director of the Company and Chairman of the ARCC. He joined the Board in March 2018.

Mark is the UK Chief Financial Officer of Rea Holdings plc and an independent Non-Executive Director and Chairman of the Audit Committee of CME Trade Repository Ltd.

Mark Spanbroek - Independent Non-Executive Director

Mark Spanbroek is a Non-Executive Director of the Company and member of the ARCC. He joined the Board in March 2013.

Mark is chairman of the supervisory Board of Transtrend BV and a former non-executive Chairman of CME Europe Limited. Mark is also Vice Chairman of FIA-EPTA the Futures Industry Association.

 

--

(1) In the Directors' opinion, toxicity is effectively a measure of how quickly prices move on a trading venue once a trade has been made. A low toxicity exchange should reduce the implicit costs of trading which is beneficial to institutions.

 

 

 

 

IMPORTANT INFORMATION

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company, Liberum Capital Limited ("Liberum") or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with this announcement.  Liberum does not accept any liability whatsoever for the accuracy of any information or opinions contained in this announcement or for the omission of any information from this announcement for which the Company and the directors are solely responsible.

Liberum, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company in connection with the proposed Placing and Admission and are not acting for or advising any other person, or treating any other person as their respective client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Liberum or advice to any other person in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit. Liberum's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers and AIM Rules for Companies will be owed solely to the London Stock Exchange and not to the Company, to any of its directors or any other person in respect of a decision to subscribe for or otherwise acquire Ordinary Shares in reliance on the Admission Document. Liberum has not authorised or approved the contents of, or any part of, this announcement and no representation or warranty, express or implied, is made by Liberum or its affiliates as to any of its contents.

This announcement is being delivered for information purposes only to persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors"). For these purposes, the expression "Prospectus Directive" means Directive 2003/71/EC, as amended, and includes any relevant implementing measure in each member state of the European Economic Area which has implemented the Prospectus Directive. In addition, in the United Kingdom, this announcement is being delivered for information purposes only to Qualified Investors who are (i) persons having professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net-worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO; and (iii) persons to whom it is otherwise lawful to communicate it to. It is not intended that this announcement be distributed or passed on, directly or indirectly, to any other class of person and in any event, and under no circumstances should persons of any other description rely on or act upon the contents of this announcement.

Neither this announcement nor any copy of it may be (i) taken or transmitted into, distributed, published, reproduced or otherwise made available, directly or indirectly, in the United States (within the meaning of Regulation S under the US Securities Act of 1933, as amended (the "US Securities Act")), (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Canada, Australia or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, or (iii) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such a solicitation or offer. Any failure to comply with these restrictions may constitute a violation of the securities laws or the other laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

The Ordinary Shares have not been and will not be registered under the US Securities Act, and may not be offered or sold in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. No public offering of securities is being made in the United States. Neither the US Securities and Exchange Commission nor any state securities commission or other regulatory authority in the United States has approved or disapproved of the Ordinary Shares or passed upon or endorsed the merits of the offering of the Ordinary Shares or the adequacy or accuracy of this announcement. Any representation to the contrary is a criminal offence in the United States. No securities commission or similar authority in Canada has in any way passed on the merits of the securities offered hereunder and any representation to the contrary is an offence. No document in relation to the proposed placing of the Ordinary Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance. Accordingly, subject to certain exceptions, the Ordinary Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from a Restricted Jurisdiction or offered or sold to a person within a Restricted Jurisdiction.

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Board's expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance. Though the Board believes these expectations to be reasonable at the date of this document they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

 

 


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