Exclusive-British data group Quantexa exploring UK or US IPO

By Amy-Jo Crowley

LONDON, Aug 19 (Reuters) - British artificial intelligence company Quantexa is considering a multibillion-dollar stock market listing in Britain or the United States, its chief executive told Reuters. 

"We can list in the UK or the U.S., or both," Vishal Marria said, adding that the company has not decided when to pursue a public offering and could remain privately held. 

A U.S. listing would deal a further blow to London's stock market, which has seen a string of companies opt for U.S. exchanges. Marria said the U.S. offers a deeper pool of capital and the potential for a higher valuation than the UK. 

Marria said Quantexa has been "IPO-ready" since January but declined to comment on the timing of any IPO.

Founded in 2016, Quantexa's AI software helps organisations, including financial institutions, healthcare providers and government agencies, organise and analyse large volumes of data for uses including fraud detection and financial crime prevention.

"We need to recognise that companies are increasingly mobile and that we need to make it compelling for companies to list in London rather than rely on home-grown sentiment," said Charles Hall, head of research at Peel Hunt. 

"The reality is that our leading tech companies have a broad range of investors and board members who will advocate for the most appropriate listing venue for the company. If the UK is to thrive we need to ensure that our fast-growing innovative companies list in London."

Britain has reformed its listing rules in a bid to attract more listings.

UK CONTRACTS

Some British politicians and technology executives have argued that public bodies should favour domestic technology providers over U.S. rivals such as Palantir, whose federated data platform is used by the UK's National Health Service.

New Prime Minister Andy Burnham said in July that Britain should use public procurement to support domestic industry. 

Marria, however, said data sovereignty depends less on where a supplier is headquartered and more on whether customers can retain ownership and control of their data and move it elsewhere when contracts end.

Earlier this year, Quantexa announced a £175 million ($223 million) contract with Britain's revenue and customs agency to combine internal and external data sources to improve fraud and error detection.

The company is also competing for the NHS's planned single patient record programme, which would allow staff to access a patient's medical history through a single system, Marria said. 

He said Quantexa's software works with existing systems and reduces the risk of vendor lock-in, helping the NHS to retain control of its data. 

SHARE SALE

Meanwhile, minority shareholder Warburg Pincus is working with adviser Citigroup to explore options for its 9% to 10% stake in the London-headquartered company, including a possible sale, two people with knowledge of the matter told Reuters. 

The potential stake sale has not previously been reported. Other investors could also sell shares as part of the process, the sources said, speaking on condition of anonymity because the discussions are private. 

Marria declined to comment on the possible stake sale. Warburg Pincus and Citi also declined to comment.     

The process is at an early stage and Warburg Pincus is expected to launch an auction later this year, the people said, while cautioning a deal is not guaranteed. 

Quantexa was valued at about $2.6 billion last year when it raised $175 million in a Series F funding round led by Teachers' Venture Growth, part of Ontario Teachers' Pension Plan, according to a company statement. Warburg Pincus first invested in July 2021, leading a $153 million Series D funding round. 

(Reporting by Amy-Jo Crowley. Editing by Anousha Sakoui and Mark Potter)