Against a background of a standstill in biomed offerings in the US, Trendlines International Ltd., an investment company active in medical devices and agritech, has filed a prospectus for an offering on the Toronto Stock Exchange. The offering will be led by Paradigm Capital Inc., Euro Pacific Canada Inc., Octagon Capital Corporation, and M Partners. There is no minimum amount to be raised, but it is estimated that the company will seek to raise between a few million dollars and tens of millions, at a valuation in the tens of millions.
Trendlines was founded as the franchisee of the Misgav technology incubator and as a biomed consultancy by two experts in the field who immigrated to Israel from the US, Steve Rhodes and Todd Dollinger. Each owns 5.9% of the company. The largest shareholder is a passive investor, Zeev Bronfeld, one of the owners of the Biomedix and Bio-Cell groups.
Today, Trendlines is the franchisee of two incubators, Misgav (now called Trendlines Medical) and Mofet B’Yehuda Accelerator (now Trendlines Agtech), and over time has produced out of these incubators a portfolio of subsidiary companies. Its activity is small in scale, but effective. Four portfolio companies (PolyTouch, Flowsense, Innolap, and Inspiro) have been sold in exits that, while each yielded only a few million dollars for Trendlines, represented high returns on investment.
Trendlines generally invests around $500,000 in its portfolio companies, and not more than $5 million. A large part of the investment is financed by the Chief Scientist. The group has 52 portfolio companies, and seeks to continue setting up companies at a rate of 8-10 a year.
Besides the two incubators, Trendlines also operates Trendlines Labs, which develops products in collaboration with major companies, and it has plans to set up an incubator in China in collaboration with a local partner.
In 2013 the company had revenue of $29.7 million (representing 170% growth over 2012), of which $23 million derived from a rise in the valuation of portfolio companies. It posted a profit of $16.7 million, 180% more than in 2013. The company had a negative cash flow of $4 million in 2013.
The decision to make an IPO in Canada apparently stems from the view that there are potential anchor investors for the offering in that country, and from the fact that it is possible to float relatively small companies on the Toronto Stock Exchange. Biomed offerings are rare on the Toronto market, but one Israeli biomed company, Neovasc, is already traded there. It was merged into a stock market shell company by its then leading investor, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) chairman Phillip Frost.
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2014
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