BlueMount’s Capabilities for USA Companies to IPO on the ASX
BlueMount has been established for over 10 years and has offices throughout Australia, Beijing China and Los Angeles USA.
BlueMount Capital is a capital markets company licensed by ASIC our corporate regulator with 4 Australian offices. We have teams in each of these 5 cities to service our clients.
BlueMount specialise in listing foreign companies on the Australian Securities Exchange (ASX) and, acting as lead manager, we take 100% responsibility to achieve the listing for clients.
In the past five years there has been an increase in the number of international companies listing on the Australian Securities Exchange (ASX). There are more than 280 international businesses listed on ASX, which by number account for about 12 per cent of all listed entities. 46 US companies have listed on the ASX so far. 13 US tech companies have listed on the ASX via IPO since 2014.
US companies have significant advantages and benefits listing on the ASX compared to their home market, with lower maintenance costs and ongoing maintenance post-IPO.
Introduction
• The US IPO market is becoming unachievable for firms with a market capitalisation below $1 billion.
• US companies have significant advantages and benefits listing on the ASX compared to their home market.
• COVID-19 has had large negative impacts on the market, with global and US IPO’s experiencing a significant slowdown. The ASX in Australia has experienced the same slowdown. However, we believe listing activities will sharply increase in the post-COVID world due to demand.
Going Public may be the most exhilarating and demanding challenge you and your business will ever face. A well-executed listing provides an infusion of long-term capital that can fuel growth and greater shareholder value. Your company’s reputation, too, will be enhanced by the greater prestige of a publicly owned corporation.
A poorly executed listing, however can dim your company’s bright future. We would like to bring you an understanding of the listing process based on our experience.
Winning is all in the team you put together. BlueMount Capital would be honoured to be part of your team.
If this is your first experience in taking a company public then we hope that this information will lead you through a logical explanation of the process:
- What are the advantages and disadvantages?
- What will it cost?
- What are the entry requirements?
- How long will it take?
Listing in Australia – Why?
• The Harvard Business Review has named Australia as its No. 1 country to invest in.
• Australia has had one of the best-performing economies in the industrialized world in recent decades, holding the record for the longest period of recession-free growth of any developed country.
• These successes reflect many factors, inclusive of sound management, strong population growth, a rich endowment of natural resources.
• With a GDP of approximately US$1.38 trillion in 2019, Australia was the 14th largest national economy by nominal GDP and the fastest growing advanced economy in the world.
• The average wealth per adult of US$191,453 making Australians per capita, the wealthiest people in the world.*
* Global Wealth Report 2018 – Credit Suisse
Why Tech Companies List with ASX?
• Significant cost savings to list in Australia compared to the NASDAQ/NYSE.
• Earlier entry to a globally recognised index.
• Main board listing on a Tier 1 exchange.
• Active network of tech brokers and analysts.
• A$4B in IPO capital raised from 2013-2018.
• Australia is home to one of the world’s largest pools of capital.
• Dual listing on NASDAQ possible once market cap on the ASX increases.
“Technology is not only a key plank of ASX’s own business development, but it is also a key part of our listings growth strategy. We now have approximately 200 listed tech companies – our second largest sector behind resources.”
Dominic Stevens – ASX chief executive
“It has become so onerous to be public in the US … from the things I’ve seen the ASX doing, it is a very compelling alternative to later stage capital here in the US, so I do think there is going to be a wave of a number of US tech companies doing this.”
Chris Hulls CEO & Founder Life360 – ASX: 360
Understanding the ASX
- Beginnings stretching back to 1861.
- Over 2200 listed issuers.
- Offers Global Investors exposure to Financials, Industrials, Resources, Healthcare, Life Sciences and Information Technology.
- One of the world’s top ten listed exchanges measured by market capitalisation.
- Inclusion in the S&P/ASX: Indices can be used as a benchmark for the performance of investment funds, and portfolios will hold shares included in that index.
- Reputation: Renowned international reputation for conducting markets of integrity.
- World Class Systems: Driven by leading edge electronic trading, settlement and registry systems.
- Scale: One of world’s top equity markets.
Benefits of Listing on the ASX
- Access to capital for growth.
- Institutional investment.
- A (secondary) market for your organisations shares.
- Alignment of employee /management interests.
- Higher public and investor profile.
- Improved valuation.
- Exit strategy for early stage investors.
- Reassurance of customers and suppliers.
Why companies choose to list and Go Public
- Higher public and investor profile.
- Capital raising
- Reassurance of customers and suppliers.
- Establishing a valuation for the company.
- Use of shares for acquisition.
The US IPO market Why Australia?
- The US IPO market for smaller companies in the $500M-$1B funding range is becoming unachievable.
- The age of companies at time of a US IPO has increased (from ~6.5 to ~10.5 years).
- The annual number of US IPOs decreased (from ~400 to ~100).
- The valuation of US IPOs has increased more than 6x.
- Holds the record for the longest period of recession-free growth of any developed country up till COVID-19.
- Positioned in the world’s fastest growing region • Stable, democratic and culturally diverse.
- Gateway to global capital ~45% international investors*.
- Robust regulatory environment.
- A long history of funding and listing early stage companies.
*45% of institutional ownership of S&P/ASX 200 Index by overseas institutions 2019.
Why US Companies List on the ASX?
- Earlier entry to a globally recognised index.
- Main board listing.
- Active network of tech brokers and analysts.
- A$4.7b in IPO capital raised from 2014-2019.
- Dual listing on NASDAQ possible once market cap on the ASX increases.
- 18 ASX listed companies with a valuation over $1 billion in the tech space.
Listing on the ASX – A Globally Recognised Market
- The ASX offers companies a globally recognised listing and capital raising venue, attracting both Australian and international investors. ASX’s significance as an equity market is reflected in the broader strength of the Australian economy, which has recorded more than 20 years of uninterrupted growth.
- With a relatively high-growth and low-inflation economy supported by robust political and economic institutions, and an internationally competitive business sector, Australia now ranks as the 12th largest economy in the world (measured by GDP) and the 3rd largest in the Asia-Pacific region.
- It has a well-developed funds management industry, with the world’s 3rd largest pool of investable funds.
- ASX has over 2,200 listed companies, spread across all industry sectors and a range of geographical regions.
- It is the world’s 9th largest equity market by free-float market capitalisation, the 7th largest exchange organisation and is consistently ranked in the top 5 exchanges for equity capital raising.
ASX Entry Requirements
- The ASX listing requirements are tailored to support profitable companies.
- The Listing Rules set out the specific requirements that an organisation has to meet to list on ASX’s market and are underpinned by a set of principles that ensure the quality of the market ASX operates.
- To be eligible to list on ASX, a company must satisfy minimum admission criteria, including structure, size and number of shareholders.
ASX Admission Criteria General Requirements
- Company must be audited.
- Due diligence completed.
- Approved prospectus.
- Number of shareholders Minimum 300 investors @ $2,000
- Profit test $1 million (US$700,000) aggregated net profit over past 3 years + $500,000 (US$350,000) net profit over last 12 months or
- Assets test $5 million (US$4m) Net Tangible Assets or $15 million (US$10.5 m) market capitalisation.
- A 20% shareholder “free float”.
What Does It Cost to List on the ASX?
Estimate of cash costs to be funded during the IPO process
US NASDAQ Main Board: US$4~7M
Australia ASX Main Board: US$1.5M
- Above includes all service providers, excludes commission on funds raised and other non-cash costs upon successful listing.
- Costs depend on individual company requirements and complexity.
- A detailed quote will be given once all material issues and client requirements are known
- Most costs paid during the IPO can be refunded from the IPO funds raised
Valuations and Capital Raising
Before we commence the assignment, we will discuss with you the quantum of capital that you wish to raise and the valuation that you place on your company.
When arriving at a valuation we must take into account comparable companies listed on the ASX in your industry as your valuation must accord with the established market.
The proposed capital raising will be discussed more fully with you once the services of BlueMount Capital have been formally engaged, through the signing of a formal mandate. We have a specific fundraising process that we have used on each of the IPO’s that we have successfully completed. This process includes multi-marketing to our large investor base, direct marketing campaigns, investor road-shows and assistance from our stockbrokers and dealers in Australia, across Asia and the US and working with your connections to raise the funds required.
How Long Does it Take to List on the ASX?
It all depends on the actual circumstances and readiness of the client; however, 10-12 months is a general guide.
Board Structure and Corporate Governance
The ASX has guidelines for the structure of the Board of Directors and generally a number of Australian resident directors are required (BlueMount can introduce suitably qualified people if required)
Australia has strong corporate governance policies which should be adhered to.
Post Listing Issues – need for continuous investor public relations
- An issue that is often neglected is for the company to keep the investor market informed.
- A good way to do this is by having continuous investor road shows and producing appropriate information such as research reports.
- An informed market will provide better support for the company’s share price.
- Need for company to deliver – Profits/payment of dividends/good corporate citizenship.
- For any company, it is important that they are a good corporate citizen and conduct their affairs properly, paying a lot of attention to good corporate governance.
- Increasing profits, paying dividends and good communication to shareholders should attract market support for the stock.
Management Considerations when Listing on the ASX
- Control.
- Change in the structure of ownership.
- Responsibilities.
- Director’s responsibilities come with regulations.
- Continuous Disclosure.
- Informatory obligations.
IPO Services Provided by BlueMount
- BlueMount assume 100% responsibility for the IPO and project manage the whole process.
- BlueMount recruit and supervise all professional parties such as lawyers and auditors.
- BlueMount have regular conference calls via WhatsApp/Zoom/Meet with the clients IPO management team.
- BlueMount have responsibility to raise the funds required.
- BlueMount assist with the 300 shareholders required to list.
- BlueMount liaise constantly with the ASX throughout the process.
- BlueMount assist with post IPO services in conjunction with stockbrokers to provide investor relations services.
The BlueMount ASX IPO Team
Len McDowall, Managing Director
Eric Sun, Director
Ross McDowall, Director
Alex Chen, Director and USA representative
How to Get Started with an ASX IPO?
- Initial meeting with BlueMount
- Initial questions
- Further questions.
- Proposal.
- Issue Mandate.
- Commence IPO.
US Companies Listed on the ASX Case Study
Employee experience software
Listed in December 2019 with market capitalisation of A$491,000,000
Raised A$100,000,000 at listing
PDF Software
Listed in December 2019 with market capitalisation of A$325,000,000
Raised A$110,000,000 at listing
Buy now pay later (BNPL) solution
Listed in July 2019 with market capitalisation of A$217,000,000
Raised A$43,000,000 at listing
Location sharing app
Listed in May 2019 with market capitalisation of A$689,000,000
Raised A$145,000,000 at listing
Recent IPOs completed by BlueMount Capital
Boyuan Holdings Limited (ASX:BHL) conducts property development and management in Australia & China.
BlueMount Capital acted as Lead Manager to Boyuan Holdings Limited for its IPO in October 2016.
IPO market capitalisation A$68,000,000
China Dairy Corporation, located in Harbin, China is a leading producer and wholesale distributor of raw milk.
BlueMount Capital acted as Corporate Advisor to China Dairy Corporation for its IPOin April 2016.
IPO market capitalisation A$147,000,000
iBosses, based in Singapore which provides, consultancy and services to entrepreneurs, listed on the ASX in September 2015.
BlueMount Capital acted as Lead Manager and Corporate Advisor to iBosses for its IPO.
IPO market capitalisation A$25,000,000
Victor Group Holdings , which is based in Shanghai, China is a leading local provider of management training.
Victor Group listed on the ASX in May 2014
BlueMount Capital acted as Lead Manager and Corporate Advisor to Victor Group for its IPO.
IPO market capitalisation A$104,000,000.
Sunbridge, a successful fashion group based in Fujian province China, listed on the ASX in November 2013
BlueMount Capital acted as Corporate Advisor and Listing Manager to Sunbridge for its IPO.
IPO market capitalisation A$98,000,000