This year has seen a re-emergence of interest in IPOs. With $16.8 billion raised from IPOs this year from over 90 floats (up from $10.8 billion raised last year), IPOs are again becoming an attractive way to raise capital. Just recently, Medibank Private raised $5.7 billion from its float and other companies are likely to follow its lead and launch IPOs this month and early in 2015. Some highlights include online retailer Surfstitch which is seeking to raise over $83 million and cloud platform Aconex with a $50 million offer, who are both seeking to float on the ASX later this month.
The ASX is Australia’s premier stock exchange. Below are some of the benefits of listing on the ASX.
The ability to access capital from retail and institutional investors
Listings on the ASX are usually conducted with the assistance of a stockbroking firm who will often underwrite the offer and sell the securities through their distribution network. Stockbrokers and financial planners are unlikely to recommend securities to their clients that are not listed on the ASX or rated by a rating agency.
Liquidity
The ASX is by far the largest securities market in Australia. Trades are settled electronically three trading days after the transaction settles.
Corporate governance
Listed companies are required to implement corporate governance policies and continually update the market on the performance of the company.
Enhanced credibility
Listing on the ASX can enhance your credibility with customers, business partners, suppliers, investors and lenders.
Multi-jurisdictional capital raisings
Astute companies are seeking to raise funds domestically on the ASX, in tandem with overseas capital raisings. This allows companies to access capital from larger overseas financial markets, such as Singapore. Singapore laws permit Australian companies to provide their prospectus or product disclosure statement to Singapore investors in conjunction with simple ‘wrap documents’. This allows Australian issuers to access Singapore’s financial market with a low cost ‘bolt on’ to their Australian offer document.
Lawyers typically provide the following services in connection with the IPO process:
- project management;
- drafting the prospectus or product disclosure statement;
- undertaking legal due diligence on the company to resolve any material issues prior to the float;
- pre-IPO restructuring;
- negotiating with underwriters; and
- liaising with the ASX in relation to admission requirements.
FC Lawyers has recently completed two capital raising. Click here to find out more about these transactions. If you have any questions regarding capital raisings or IPOs please don’t hesitate to contact me.
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