The Belgian firm, specialising in transmission technology for vehicles and industrial processes, achieved the first-ever ‘crowdlisting’ on Euronext Brussels. Shanny Basar reports.
Filip De Mazière, CEO of automotive engineering company, Mazaro, is more accustomed to designing transmissions and clutches for high-end cars and other vehicles than he is with engineering equity raises. Mr De Mazière, a mechanical engineer by trade, has obtained 15 international patents and designed numerous transmission mechanisms for companies including McLaren and Ferrari. Now, as of March 8, 2022, he can add Mazaro’s successful €3.7m direct listing on Euronext Access Brussels, via a crowdfunding campaign and private placement, to his CV. This marked the first ‘crowdlisting’ on Euronext Brussels.
Mazaro had been looking for a capital increase for a while, and initially called venture capitalists and its component manufacturers before it discovered crowdfunding. It saw that a direct listing could work well for a small company. The transmission firm talked with several companies listed on Euronext, learnt about listing sponsors, and put together a team to guide it, consisting of ONEtoONE Corporate Finance; Ventures4Growth (V4G), a boutique corporate finance house; and Spreds, the biggest crowdfunding platform in Belgium, which provides access to approximately 40,000 retail investors.
Mix of investors
Guy van der Heyden, managing partner at ONEtoONE Corporate Finance, says the boutique proposed a private placement for qualified investors with a minimum of €100,000 per person in partnership with V4G, and a crowdfunding with Spreds, with the shares being brought onto Euronext Access through a direct listing. He argues that the variety of investors contributed to the success of the deal, with the qualified investors helping Mazaro surpass its initial target and the smaller investors increasing liquidity. However, he also noted that it does take time to coordinate the different players, such as the legal advisor, the accountant and the communication agency (Backstage Communication), which is very important for crowdfunding.
The crowdfunding, managed by Spreds, allowed us to get more visibility and more liquidity, as shares can be sold more easily in smaller amounts
Mr De Mazière says: “The crowdfunding, managed by Spreds, allowed us to get more visibility and more liquidity, as shares can be sold more easily in smaller amounts.”
Mazaro announced an initial target for the crowdfunding of €500,000 in December 2021; by January 2022, it had raised €800,000 from retail investors. Mr De Mazière believes the offer was successful because retail investors were attracted to Mazaro’s innovative transmission technology, which drastically reduces energy consumption and emissions in vehicles and industrial drivelines. Mazaro’s transmissions reduce the energy consumption and emissions of both commercial vehicles and passenger cars by 11–19% and increase the driving range of electric vehicles by more than 16%. In addition, the transmissions have only 139 components, compared to a more typical 1000, making them easier and faster to produce and maintain, and very quiet to use.
The private placement to qualified investors was set to close no later than 20 business days after the closing of the crowdfunding, on February 4, 2022. The total raised from both had to reach €2m to initiate the direct listing. This was comfortably surpassed, with the private placement raising €2.9m, taking the total raised to €3.7m.
Mazaro was listed through the admission to trading of 2.75 million shares, at an issue price of €5 per share, and an initial market capitalisation of €13.8m. The funds raised will be used to complete Mazaro’s business plan and start serial production; for example, the firm needs a dedicated controller for electronic boxtops to control the transmission and to hire new engineers.
Boost to visibility
Mr van der Heyden notes that being listed offers more visibility and credibility, especially for Mazaro which has a lot of foreign clients, and also makes it easier to attract new talent. Mazaro listed on a Euronext Access market, which is designed specifically for start-ups and small and medium-sized enterprises (SMEs). Euronext Access markets have more straightforward and less extensive admission requirements than the main Euronext markets. As companies grow, they are encouraged to consider transferring to Euronext Access+ or Euronext Growth, and later to the Euronext regulated market.
A direct listing was attractive because Mazaro could prepare simplified documentation of 15 pages, instead of the prospectus that would have been required for an initial public offering (IPO), although Mr De Mazière did comment that it was difficult to summarise the business in such a short report. He adds: “You are never sure of the success of an IPO. In the first month of trading there was €136,000 of volume with 87 transactions and 14,632 exchanged shares — which is not that bad for a small company — and the price nearly doubled.”
Other companies are expected to use a similar structure to raise finance and list, especially in sectors such as greentech and biotech. “The same structure could be used for larger companies to raise between €10m and €20m, and it is interesting that Euronext is present in different countries,” Mr van der Heyden adds.
He says that a company needs to be innovative, have a high growth potential and a clear vision of short-term or medium-term profitability in order to go to market. “There are a lot of SMEs in Belgium,” Mr van der Heyden says. “This is a good way to develop these businesses and, hopefully, we will see more SMEs coming to the market.”
