US tech companies are ‘flavour of the month’ for ASX listings: says BDO in Australia

Sebastian Stevens , Partner, Corporate Finance |

09 May 2019

BDO in Australia has pointed to Australia’s superannuation system and a ‘big fish in a small pond’ environment as two key drivers behind US technology companies choosing to list on the Australian Securities Exchange (ASX).

Speaking on the day of the listing for US family tracking app operator Life360, which is likely to be the biggest technology float in Australia in three years, BDO Corporate Finance Partner, Sebastian Stevens said the ASX has seen an increasing number of US tech listings.

A total of 45 US companies have raised capital and / or listed on the ASX. In the last 12 months, BDO has consulted for several of these companies, including:

  • Pivotal Systems Corporation – who provide monitoring and process control technology for the semiconductor manufacturing industry. Among its products is the gas flow controller - raised $206.5million
  • Credible – the US-focused online student loan marketplace - raised $307 million.

“It’s mainly a case of big fish in a smaller pond. Not only can US tech companies raise capital in Australia at a better price, they also find it a great environment for attracting the attention of the media, stock analysts and investors,” Stevens said.

“Our superannuation system in Australia is also a key driver. Due to the structure of the funds, much of their capital is invested in Australian stocks and companies, making for a fertile investment ecosystem. The pool of super assets is forecast to grow faster than the Australian economy and by 2035 it could be as big as $9 trillion.

“A listing on the ASX also allows small and mid-cap tech companies the opportunity to join the ranks of indexed companies, which in turn, can help these companies raise funds. 

“The ASX has a "sweet spot" for attracting global companies with market caps of between $100 million to $1 billion.”

Background:

  • Life360 launched a A$145 million initial public offering in Australia, offering about 30 million shares at A$4.79 apiece for the float in Australia, where it already has several institutional investors. The deal will value the company at about A$689 million. This would be the largest IPO since wealth management software provider Bravura Solutions Ltd raised $111 million when it listed on the Australian Securities Exchange (ASX) in 2016, Refinitiv data shows.
  • Recent [1]reports suggest that the ASX is set to attract at least eight tech companies worth over $500 million planning to go public in 2019.

[1] Source: AFR https://www.afr.com/technology/technology-companies/us-tech-companies-back-asx-as-junior-nasdaq-20190408-p51bz8
 

ENDS

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