$1.7 billion Aussie tech company finally lists on ASX

Nuix's much-anticipated IPO comes to a climax this week. But a pending court case could cost it and its new shareholders a lot of money.

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Australian unicorn Nuix Limited (ASX: NXL) will list on the ASX on Friday, making more than $1 billion for majority investor Macquarie Group Ltd (ASX: MQG).

Nuix makes analytics software that serves big government and law enforcement agencies. The Sydney company's flagship product is an unstructured data processor named the Nuix Engine.

The software was even used to process 11.5 million documents during the famous Panama Papers investigation in 2016.

Investors have thus anticipated the float for several years now. 

This year's blockbuster listing of similarly mysterious US analytics provider Palantir Technologies Inc (NYSE: PLTR) has pumped up the hype for Nuix even more.

Palantir shares floated in October with a reference price of US$7.25 a share. It's now trading at US$25.67 — a 254% increase in just two months.

Nuix's initial public offering (IPO) saw shares offered at $5.31, giving it a market capitalisation of $1.69 billion.

However, the company is in a legal dispute with former chief executive Eddie Sheehy in the courts over his past share options. If Nuix loses that case, the market cap will be $1.81 billion due to additional shares.

The Motley Fool contacted Nuix for an interview about the IPO but, at the time of publication, had not received a response.

Macquarie's biggest deal ever?

The Motley Fool reported in September that Nuix would end up returning Macquarie more than $1 billion after an estimated $100 million to $150 million investment.

There is speculation that the float will end up being Macquarie's biggest single winning bet.

But the court proceedings against Sheehy remain a dark cloud over potential retail investors.

According to The Australian Financial Review, if Sheehy wins the case in a year or two, Nuix and its shareholders will have a headache regardless of whether the share price has gone south or north.

This is because he will claim damages based on lost opportunity to sell out his stake.

"The shares are floating at $5.31, but if Sheehy wins his case in a year or two and the price meanwhile drops, say 20 per cent for example, then on top of getting his options he will be claiming $24 million damages for his lost opportunity to sell out," reported the AFR this week.

"This will stretch a company with forecast EBIT of just $27.5 million for 2021."

If the Nuix share price rockets up like Palantir, Sheehy could be owed a 9-figure amount.

Friday's listing will be keenly watched by many parties — retail investors, Australia's tech sector and Sheehy.

Nuix reported revenue of $175.9 million for the 2020 financial year and forecasts $193.5 million for the current year. The company made a net profit of $18.8 million for the 2020 financial year. 

Motley Fool contributor Tony Yoo owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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