This Deal Matters: Glori Energy to Go Public through Reverse Merger
On Wednesday, news hit the wires that Glori Energy, a company commercializing microbial enhanced oil recovery (MEOR) technology for water-flooded and otherwise abandoned oil wells, would be taken public through a reverse merger with a company called Infinity Cross Border Acquisition Corp. (hereafter to be refered to as ICBA) in a deal valued at $185 million.
If that name, “Infinity”, inspired the same initial hope in you, dear reader, as it did in me – that ICBA might have the backing of respected private equity firm Infinity Group – well then I bring good news. From the press release announcing the transaction, we learned that ICBA was established, or “sponsored”, by Infinity Group and Hicks Private Equity, the private equity investment vehicle of the family of Thomas O. Hicks.
In the company’s SEC registration statement, ICBA describes itself as, “a blank check company incorporated as a British Virgin Islands business company with limited liability (meaning that [its] public shareholders have no additional liability, as members of [the] company, for the liabilities of [the] company over and above the amount paid for their shares) and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or entities.”
Glori attempted to go public through an initial public offering in 2012 but withdrew, citing poor market conditions. Though public markets are slowly improving for new issuers, Glori seems to have elected at that time to pursue this uncoventional route to a public listing. The deal is significant as it gives Glori access to a much bigger pool of capital at a time when the company is ready to commercialize and deploy its technology more widely. It also provides a solid path to exit for the company’s investors, which include Kleiner Perkins Caufield & Byers, GTI Ventures, Oxford Bioscience Partners, Omzest Group, Energy Technology Ventures, Advantage Capital Partners, Gentry Ventures, and Malaysian Life Sciences Capital Fund.
Reverse mergers have had a dodgy reputation in the past, as being a tool of nefarious folks aiming to access easy capital through over-the-counter markets, but ICBA, which went public in July, 2012, is traded on the NASDAQ (INXBU) and the fact that more than one respected private equity firms like Infinity Group are involved in the deal means Glori Energy should enjoy firm footing from which to launch this new phase of its development.