Xpansiv raising sets path for IPO in June quarter

Macquarie Group and BP-backed Xpansiv CBL Holding Group is plotting a second-quarter ASX listing.

Ben Stuart, Xpansiv’s chief commercial officer and XCHG co-founder. Picture: Britta Campion

Macquarie Group and BP-backed Xpansiv CBL Holding Group is plotting a second-quarter ASX listing, as it seeks to capitalise on burgeoning demand for green economy products and companies seeking to lower their carbon output.

Xpansiv has ruled off its latest capital round with a $US40m ($51m) pre-initial public offering capital raise from existing and new investors. That bettered a targeted $US35m, due to strong investor demand.

The company was formed in 2019 through the merger of Sydney-based CBL, a commodity spot exchange, and San Francisco-based Xpansiv, a data-led ESG commodities platform.

Xpansiv chief executive Joe Madden said subject to market conditions, existing and potential investors were supportive of an ASX listing this year.

“The capital will be used to fund growth initiatives that continue to strategically position Xpansiv for success,” he said.

The company would not be more specific on its plans, but industry sources suggested an IPO may value Xpansiv at more than $500m, with the float being targeted for the June quarter.

The group’s plans come after Moody’s Investors Service released a report on Wednesday highlighting that many governments around the world had “seized the opportunity” provided by COVID-19 to lock environmental objectives into recovery packages.

Xpansiv — also known as XCHG — counts Macquarie, oil giant BP’s venture arm, S&P Global and Caledonia Investments’ co-chief investment officer Will Vicars among its backers ,

Mr Vicars, also a rich lister, was an early supporter of CBL after meeting founders Ben Stuart and Nathan Rockliff in 2015.

Another early backer was Larry Leibowitz, a former New York Stock Exchange chief operating officer, who is now vice chairman of the merged group.

Xpansiv’s executive chairman is venture capitalist Will Stewart, who said the company believed “market-based solutions” would play a key role in enabling a transition to a low-carbon future.

Xpansiv will join a healthy IPO pipeline for 2021, after a late rush of listings in the fourth quarter of last year. But the new crop of listed companies have had mixed fortunes in how they traded after IPO, and local technology stocks have come under pressure on the ASX this week with the S&P/ASX 200 Information Technology Index dropping 4.7 per cent over three days.

Caledonia Investments’ co-chief investment officer Will Vicars.

Fund mangers continue to apply heavy scrutiny to upcoming IPOs and the market tends to accelerate after the February profit reporting season.

“Xpansiv is perfectly positioned to grow, and an Australian listing will help drive progress,” said Ben Stuart, Xpansiv’s chief commercial officer.

“We’re focused on a strategic path to advance our market position and accelerate the growth of commodity products on our exchange platform.”

The pre-IPO funding round was led by Shaw and Partners and was pitched to a select group of investors. It’s understood they included the likes of Wilson Asset Management and Saville Capital.

The Xpansiv float is being pursued instead of an earlier planned $US70m Series B fund raising, which was expected to bankroll several acquisitions in America.

“We believe ESG-based commodities are an entirely new asset class, and the markets where they trade must scale exponentially to meet climate-mitigation targets pledged by governments, companies, and entire industries. Xpansiv is at the forefront of this wave, and we now have additional resources to expand,” Mr Madden said, referring to the pre-IPO funding round.

Xpansiv is tapping demand by companies around the world wanting to trade ESG-inclusive products, including carbon offset financing and trading, that include data on the commodities.

The company is pursuing growth across a number of areas. This week, Xpansiv announced it was partnering with oil and gas data platform Validere to attach ESG attributes to energy products.

It also has exposure in the airline sector after last year teaming up with the International Air Transport Association to develop the Aviation Carbon Exchange to help players meet their emissions reduction commitments.

Last year, Telstra was certified carbon neutral in its operations by using CBL to purchase 2.3 million offset credits from carbon-neutral projects around the world. Even mining giants including BHP are tipping money into cutting their carbon output, and Rio Tinto has stated a desire to produce low-carbon aluminium.

The shift in the value of “low-carbon commodities” has also been highlighted by Liberty Steel Group’s aim for carbon-neutral steel.

Xpansiv’s statement, to be released on Thursday, said trading volumes on its CBL spot exchange grew by more than 172 per cent over the 12 months ended November 30.

The company has four main business units including XMarkets, which enables the trading of renewable energy, carbon offsets and water; XSignals, which sets benchmarks to price ESG factors; XRegistries, which provides a registry for ESG portfolio management; and XContext, which aggregates large scale data pools of ESG commodities.

Xpansiv says its ecosystem provides a “clear path to action” for companies seeking to meet voluntary and compliance-based ESG goals.