A developing trend: Are Asian startups also listing on the ASX in lieu of raising from Angel Investors?
Earlier this month I wrote an article about a trend in Western Australia where startups seem to be choosing a listing either via IPO or backdoor on the Australian Stock Exchange.
In the article, I stated that experienced technology and media entrepreneur Ruwan Weerasooriya believes the Venture Capital scene in Australia has grown in leaps and bounds over the last decade but believes that the ASX has emerged as a competitor for providing growth funding to tech companies.
I also spoke about the back door listings of Bulletproof Networks, Decimal Software, Mig33, Newzulu and Spring.me along with recent market support for listed companies such as mobile payments company Mint Wireless, cloud based accounting software provider Xero and job marketplace Freelancer as growing evidence that the ASX is a viable funding source for growth stage companies.
It seems though that it is not just Western Australia that is jumping on the ASX bandwagon to raise funds; we have identified a number of Asian technology startups that are also turning to the ASX as opposed to the Singapore Stock Exchange to raise capital or seeking funding from local investors and angels.
Singapore-based Fat Fish Internet began trading on the ASX on July 22, after raising SG$4 million (US$3.22 million). The Group aimed to raise the same amount in its prospectus, making it 100 percent subscribed. The shares opened at 22 cents and climbed as high as 29 cents.
Other Asian startups that have hopped on board the ASX bandwagon include Singapore-based mobile social network (Mig33) Mig.me, Malaysian software development firm 8common, and Hong Kong mobile games developer and publisher Animoca.
Mig33 chose to go down the route of a backdoor listing. They were acquired by Australian mining exploration company, Latin Gold. A company that does mineral and mining exploration. Mig33 now owns 720 million of Latin Gold Limited’s shares. Mig33 is valued at $12.73 million after the shares acquisition at the current share price.
Likewise earlier this month 8common Limited, a Singapore and Sydney-based software developer, announced its initial public offering. Through an IPO listing on the Australian Stock Exchange (ASX), they are looking to raise AUD$3.5 million (US$3.3 million).
According to reports, they will have 14 million shares on offer at 25¢ a piece to raise $3.5 million. The minimum contribution required from investors to participate is $2500.
For the financial year that ended on June 30, 2014, 8common generated about SG$2.7 million in revenue and made a net profit of approximately $1.1 million.
Mr McCarthy told the AFR they have decided to float about 25 percent of the company in a small IPO to garner some cornerstone support and raise 8common’s profile. Another transaction to raise more capital is expected within about 12 months.
So why are Asian companies choosing to list on the ASX instead of raising capital or listing on the Singapore Stock Exchange?
According to the Asian media, tech companies in Asia are attracted to the ASX because it has a perception that investors here are more knowledgeable about internet businesses and willing to invest in them.
I don’t know if I necessarily agree with that statement 100 percent, but it definitely creates a lot of opportunity for Australian public companies wanting to get in bed with emerging tech ventures.