Some of the most impressive equity returns in Australia have been gained from investing in ASX Initial Public Offerings (IPOs) and equity placements rather than established indices or so-called ‘blue-chip’ shares, says Ben Bucknell, chief executive of OnMarket BookBuilds (OMB), an Australian fintech behind OnMarket, an innovative online investment access portal that gives all investors direct access to ASX IPOs.
According to data from OMB, companies using disruptive OnMarket technologies to raise capital from the public through IPOs and equity placements have easily outperformed indices for larger companies as well as small-caps, returning an impressive 25 per cent from October 2013 to 31 January, 2016, Mr Bucknell said.
“If you had bought and held stock in every one of 14 capital raisings offered by an OnMarket technology since 2013, you would have made a 25 per cent return on your investment. With our technology, it has never been easier for the public to participate directly in such attractive IPOs and placements. You don’t need to be a stockbroker or big institution to participate, as in times past; any investor can bid with our app or online,” said Mr Bucknell.
“The returns are impressive. If you had bought the ASX50 or ASX Small Ords indices at that time, you’d be underwater by 6 and 2 per cent, respectively,” he said. “Even when the outliers are removed (LNG which gained 1300 per cent at one point and is still up 106 per cent, and Macphersons Resources which lost 50 per cent) the OnMarket portfolio still yields a 25 per cent return overall.”
“An investment in BHP in October 2013 at $31.42 would have lost you around half of your capital investment while the big bank ANZ and NAB have fared marginally better, but are still well in the red”.
“So why the outperformance? Companies that have embraced technology and raised capital directly from the public are clearly doing more than one thing right: they have, as a group, significantly outperformed their peers, the market, and so-called blue-chip ‘safe bets’,” said Bucknell.
“In a world where technology is disrupting every industry, using OnMarket could indicate that a company’s management team is comfortable with disruptive technology. It takes a certain type of executive to embrace a new technology, particularly for raising capital.”
To make IPOs more accessible, OMB recently launched its OnMarket platform and app, which bypasses brokers and gives investors free, fair and direct access to ASX IPOs and equity placements. “OnMarket is the world’s first free-access capital raising tool that enables eligible investors to easily access IPOs and placements conducted by ASX-listed companies. It is completely free to investors: it’s free to sign up, bid and invest. A defined and automated system ensures all OnMarket bidders are allocated fairly.
“We now offer investors a great opportunity to build their wealth by investing directly in Australian IPOs or placements which have in the past often been available only to a select group of institutional investors.
“Through our disruptive technology, we are opening up access to IPOs and offering investors more equitable terms and the opportunity to diversify their portfolios beyond the big banks and big miners. We offer diversity and equality of access to equity raisings and potentially much better returns for building wealth,” Bucknell said.