Nuix falls as lawyer Amanda Banton weighs class action

Shares in software company Nuix came under continued pressure on Thursday as lawyer Amanda Banton confirmed plans to investigate a possible class action.

Shares in software company Nuix came under continued pressure on Thursday as lawyer Amanda Banton confirmed plans to investigate a possible class action on behalf of shareholders.

Nuix, which launched on the ASX in December at $8.50 a share and hit a record high of $11.86 in January, closed down 6.8 per cent at $3.41 on Thursday amid increasing reports of potential class actions as a result of the circumstances surrounding its IPO.

Confirming plans to investigate a potential class action on behalf of shareholders of Nuix, Ms Banton said there were “potential conflicts of interests” that needed to be investigated, including the roles of major shareholder Macquarie Bank, and its representatives on the board.

Ms Banton said her firm’s investigation of the Nuix IPO would include a review of the roles of Macquarie Bank, its representatives on the Nuix board, its auditor PwC and the joint lead managers of the float, Morgan Stanley and Macquarie Capital.

She said the December 4 IPO of the company, which raised $953m, allowed Macquarie Bank and senior company executives to “cash out” some of their investments in the company.

She said this may have left the company with “insufficient financial flexibility to support its growth strategy”.

Banton Group’s Nuix investigation will focus on the forecasts for the 2020-21 financial year made in the IPO prospectus, as well as the role played by Nuix’s major shareholders, directors and advisers.

“The Nuix float provided a vehicle for Macquarie Bank and senior executives to ‘cash out’ and may have left Nuix with insufficient financial flexibility to support its growth strategy,” Ms Banton said.

She said almost $900m, or 94 per cent of the capital raised by the float, went to Macquarie Bank and other pre-IPO shareholders, including co-founder Tony Castagna and advisers.

The remaining $53m was used to repay debt of $25.5m, leaving Nuix with increased cash of only $28.5m.

“There are potential conflicts of interest that need to be investigated, together with the disclosures made to the market,” Ms Banton said.

“We will likely be reviewing the roles of Macquarie Bank and its representatives on the board of Nuix, the auditor, PwC and the joint lead managers, Morgan Stanley and Macquarie Capital.”

The group plans to lodge its ­action in the Supreme Court of Victoria to take advantage of a new class action regime in the state.

The Victorian regime allows law firms to seek a “group costs order” by which their legal costs will be calculated as a percentage of any resolution sum, otherwise known as a “contingency fee” basis.

“Banton Group has built a substantial war chest to fund class ­actions and is ready to bring its ­financial wherewithal to bear to support aggrieved shareholders to hold the big end of town accountable,” Ms Banton said.

Nuix shares hit a record low of $3.06 on Wednesday morning. They closed at $3.41 on Thursday after hitting an intraday low of $3.23.

The company had a market capitalisation of $3.54bn in late January but at Thursday’s market close it was worth just $1.08bn.