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Hello Real Estate has backed out of its reverse takeover of Minrex Resources, a publicly listed resources company, in what both parties described as a mutual decision.
Hello founder Phil Horan told Mortgage Business' sister publication, Real Estate Business, that the IPO had been cancelled because public interest had been below expectation.
Mr Horan gave two reasons: the poor performance of the share market in the past few weeks and the decline in the share price of McGrath Estate Agents since it went public on 7 December.
“McGrath was the real estate benchmark listing because it was the first one out of the barrier, and that hasn’t done anyone any favours,” he said.
“The people working with us on [the float] said that if the timing is wrong, institutions will be very shy of it because of the McGrath precedent.”
Hello is based in NSW, Victoria, Queensland and South Australia, and plans to move into Western Australia and the ACT “in the coming months”.
Mr Horan said Hello has been growing strongly, with the number of licensees increasing from 12 to 41 in the past three months, another 14 people scheduled to be trained on 14 February and another 140 applications under consideration.
Hello felt that an undersubscribed IPO would've sent a negative message to current and future licensees, according to Mr Horan.
Mr Horan added that Hello would reconsider going public in the new financial year, either with another reverse takeover or through a conventional front door listing.
In the meantime, Hello has begun talks with several private equity firms. The aim is to secure funding to finance the agency’s plans for further expansion in Australia and New Zealand.
Mr Horan said any private equity partner would only take a minority stake in Hello and would not be able to change its disruptive business model.
“[Private equity] is a shark tank, but it depends who you’re talking with,” he said.
“We’re in talks with a very blue-chip group that uses high-net-worth individuals. We’re not talking to one of these big offshore firms that go around pillaging; this is a very reputable company that looks at these sorts of opportunities.
“They were part of the group that advised us not to proceed [with the IPO] – we had a group of people advising us, and they were front and centre in that group.”
[Related: NAB prices Clydesdale IPO]