Bye, bye AI: One-time NZX candidate Arria NLG lines up listing over the ditch

Image / 123rf

One-time NZX candidate Arria NLG is now lining up a US$100 million ($148m) raise through an IPO across the Tasman.

The maker of natural-language artificial intelligence software has involved a number of big-name Kiwi investors over its complicated history (see below). And it still has a number of ties to New Zealand.

It is registered here; around 15 of its 140 staff are based in Auckland; and it has a number of ties to Digilent Board Member Services - the NZX-listed software firm that was sold to a New York private equity outfit for close to $1 billion in 2016.

One of Diligent's co-founders, Brian Henry, was also a co-founder of Arria NLG, along with his brother Gerald. And Arria's current CEO, New Jersey native Sharon Daniels, was formerly Diligent's chief marketing officer.

But Daniels and most operations are now based in New Jersey.

Arria NLG (the initials stand for Natural Language Generation) was founded as a spin-out from Aberdeen University research in 2009, and was first registered as a New Zealand company in 2012 after raising US$20m from local investors.

There was talk of an NZX listing, Arria listed on the London Stock Exchange's Alternative Investment Market (AIM) in 2013 amid a punch from fund manager and commentator Brian Gaynor ("Arria has an unusual capital structure as well as a complicated business model") and a counterpunch from Henry (who touted Diligent's success and said the startup was not "difficult to understand" as Gaynor had painted it. "Sophisticated investors from around the world - who purchased $48 million of Arria shares pre-IPO - did not appear to have that issue.")

Two years later it hit choppy waters and its shares lost nearly all of their value.

In May 2015, the Herald reported: "A British technology firm partly bankrolled by high-profile New Zealand businesspeople has suffered a massive share price plunge after crucial fundraising talks stalled following the loss of its largest customer, raising questions about the company's financial viability."

In 2013 Arria's shareholders included economist Gareth Morgan, former Telecom boss Theresa Gattung, ACC portfolio manager Blair Tallot, Spark chairman Mark Verbiest and disgraced fund manager David Ross. (Ross, who ran New Zealand's biggest Ponzi scheme, was sentenced to 10 years and 10 months' jail in 2013.)

Arria delisted from AIM in 2016.

2018 saw the firm lining up a compliance listing on the NZX. This time it went beyond chatter, with CM Partners brought in as an adviser, but the scheme was delayed then ultimately shelved.

Today, the Companies Office records the Bahamas-registered Ikonic Fund as Arria NLG's largest single shareholder, with a 5.7 per cent stake, followed by the Ohio-based Dan Kiley (5.5 per cent) and a group including Sistema founder Brendan Lindsay (the only "name" Kiwi investor still involved). The University of Aberdeen is still a minor shareholder.

This week, the AFR reports Arria is running a non-deal roadshow as it asses a "US$100m-odd" raising to list on the ASX.

Arria is expected to seek to raise about US$75m primary capital for its initial public offering, with another US$25m or so selldown by existing investors.

It told investors the company had raised US$160m to date and invested the funds into developing technology and global enterprise infrastructure, including 43 core NLG patents and three platforms, AFR says.

A "pacey" video displayed how Arria's AI could take raw data, like a company filing or sports statistics, then turn it into a natural language report for investors or sports fans. It also featured a virtual call centre operator taking a pizza order.

Arria said its top 12 customers could deliver 80 per cent of its revenue in 2022. The clients included big global corporations like Domino's, Mars, Covid-19 vaccine maker AstraZeneca and UBS.

The roadshow is scheduled to continue this week.

Daniels has been approached for comment.