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Bionic woman: Jenny Morel on £20m Rex listing

Shares in Rex Bionics — a maker of robotoic exoskeletons for the disabled, or those in rehabilitation — start trading on London's AIM exchange today, capping a complex takeover deal and reverse listing (it'll trade under the ticker RBX).

The Auckland-based company's major backer was No 8 Ventures and (in partnership with No 8), the Crown-owned NZ Venture Investment Fund (NZVIF).

Under the deal, No 8's shares in Rex were swapped for shares in UK company Union MedTech (already listed on the AIM). Union MedTech then changed its name to Rex Bionics to complete the reverse listing.

No 8 Ventures managing partner Jenny Morel (also chairwoman of Rex ahead of the takeover) sees four key points around the deal.

One is that the No 8 retains a 15% stake in Rex Bionics.

Two, Rex had hit a wall, she tells NBR. Orders were coming in that could not be filled. A few wealthy individuals and research institutes had bought a Rex skeleton (the base price is $US150,000, and stretches to around $US200,000 with options). The new investment from Rex will allow it to expand from boutique to larger scale manufacturing, and employ sales people.

"It's great that Rex now has enough money — £10 million — to grow the business. It's been really held back by the lack of investment."

Or, more to the point, lack of local investment.

Three, although — yes — this is yet another story of offshore investors taking control of a hot NZ tech company, its R&D will stay at its Albany, Auckland headquarters. There's some carrot and stick reasoning behind the R&D staying in NZ; Rex won't retain $2.9 million it's been awarded in matching government grants for R&D  unless it keeps research and development local. But the expanded manufacturing facility will also likely be in Albany, Ms Morel says.

Four, although neither No 8 or NZVIF have published any figures specific to Rex Bionics, Ms Morel says No 8 has put "millions" into the company over several funding rounds. Asked if investment partners No 8 and NZVIF have come out ahead, a bouyant Ms Morel answers "absolutely".

Union MedTech reached an agreement to buy Rex Bionics in October last year for £9.5 million, contingent on Union MedTech raising extra funding. It did through its issue of £10 million worth of new shares, taking the value of the reverse-listed company to close to £20 million, which NBR understands is 44% above NZ investor expectations.

"The price is good, and we hope it will continue to track upwards as Rex begins to realise its potential," Ms Morel says.

"Without venture capital funds in NZ, Rex would probably not have got going.  It has taken many millions to get the company to where it is now. NZVIF and No 8 Ventures are both feeling pretty good about it."

Of the funds raised in the placement, £1.9 million has been earmarked for ramping up sales and marketing of the exoskeletons, £1.7 million for scaling up manufacturing, £1.6 million for research and development, £1.4 million for general and administrative uses, and £2.2 million for working capital.

The new company's near-term goal will be to grow sales of its rehab product targeting rehabilitation centres in Europe and the US, and is planning the release of a slimmed down and cheaper device in the coming three years. 

The company wants to accelerate the development and launch of the Rex 2, a rapidly adjustable exoskeleton device for use by multiple users in rehabilitation clinics, as well as continuing the commercialisation of Rex1, a first generation, fully-customised exoskeleton for personal use in the home and workplace.

Rex Bionics reported sales of $976,000 in the six months ended Sept. 30 compared to $15,000, according to its admission document to list on the AIM exchange. It narrowed its net loss in the period to $722,000 from $2.1 million a year earlier. The New Zealand firm made a loss of $2.5 million on sales of $394,000 in the year ended March 31, 2013.

Since the 2011 financial year, Rex Bionics raised $4.1 million through share issues and $2.4 million in short-term borrowings.

ABOVE: A BBC World Service interview with Rex Bionics CEO Richard Little and Sophie Morgan, an early adopter of the company's robotic exo-skeleton.

More by Chris Keall

Comments and questions

Top marks for sheer persistence in making this happen for Rex Bionics to Jenny and all others involved. The first of two or three No. 8 companies that are seeing some fruit.