Benefits of an ASX Listing
There are many advantages to listing a company on the ASX including:
- Enabling the company to raise capital from a wider market to:
- expand existing business
- acquire or establish new businesses
- fund acquisitions
- Enabling existing shareholders to realise the value of their equity in the business by:
- trading their shares in a dynamic and liquid market environment
- in certain circumstances, borrowing against their shares
- Broadening the shareholder base, creating opportunities for strategic investment and leveraging of existing and new business opportunities
- Providing a de facto third party (market) valuation of the company
- Improving the company’s public recognition and commercial standing, creating awareness of the company to large scale financiers, institutional investors and professional investors
- Enabling management and staff to realise value from participation in employee share / option schemes designed to increase employee commitment and loyalty
At the most basic level, listing a company on the ASX provides an opportunity for the original shareholders to realise their investment in the company, either through a sale achieved as a result of increased profile or progressively through an orderly sell-down of shares as they desire.
The ASX is one of the top 10 equity markets in the world (measured by market capitalisation) with a reputation for integrity and attracting international investors.
Practical Process for Listing
The actual process of determining that a company is suitable for an ASX listing is complex and time consuming. There are a substantial number of non-negotiable steps that must be completed and neither the ASX nor ASIC bend the rules for anyone – a company either complies with the requirements or it does not get listed.
Because the rules are strict, it is essential that inexperienced companies and individuals do NOT start any aspect of the process without appropriate advice and guidance – because one wrong step can mean that the company will NEVER get listed. It is simply not possible to erase mistakes and start again.
The process to be followed is:
- Advisor Assessment
- Detailed Due Diligence and Prospectus Preparation
- Investor Presentations
- Allotment and Trading
From the commencement of the initial Advisor Assessment to the commencement of trading on the ASX, the total time taken UNDER A BEST CASE SCENARIO ranges from 20 – 26 weeks depending on the degree to which the company is able to provide all of the necessary information and respond to queries raised.
Costs of Listing
The costs of listing a company on the ASX are substantial and should be considered in terms of the reasons for listing and the value of the benefits to be obtained.
The costs of listing a company will be influenced by various factors such as the:
- complexity of the fundraising
- size of the fundraising
- number of advisers involved
- degree of marketing.
The non-monetary costs involved in listing a company on the ASX include, among other things:
- devotion of senior management to the process
- presenting investor roadshows
- assisting with the disclosure document.
It should be noted that the typical costs of any ASX listing process range between $750,000 and $1,000,000, exclusive of any Success Fee. Legal costs and other out of pocket expenses can be substantial and we can only provide reasonable estimates of those costs after we have completed the Stage 1 – Advisor Assessment.