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Doing an IPO in Australia

Doing an IPO in Australia. MICHAEL HANSEL, PARTNER. What is an IPO?. The terms IPO, public offering, listing or floating are, by and large, interchangeable

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Doing an IPO in Australia

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  1. Doing an IPO in Australia MICHAEL HANSEL, PARTNER

  2. What is an IPO? • The terms IPO, public offering, listing or floating are, by and large, interchangeable • These terms describe the process of transforming a privately owned company into a publicly-owned company whose shares or other securities can be traded on a recognised securities exchange

  3. IPOs in 2012 – 2013 (up to 30 June) • The number • 140 for the financial year ending 30 June 2013 [99 in 2012 and 41 in 2013] • The ‘winners’ and the ‘losers’ • Comments on last year • Just 33 were above $US 20 million • Comments and expectation on 2013/2014 • Optimistic • Pent-up interest • Potential transactions are in the pipeline

  4. IPOs in 2012 – 2013 (up to 30 June) (cont) • Second quarter of 2013 market review • mixed results • three withdrawing applications, nine new floats, 40 percent drop from the same quarter last year • Some substantive deals - proceeds totalled $2,608 million, the second best quarter in the past five years

  5. Improved IPO Landscape

  6. Star floats – 2012^ (gain percent)

  7. Biggest raising (amount raised $ m)

  8. The pros and cons of listing • Benefits • Access to a greater pool of capital • Improved financial condition • A (secondary) market for your organisation’s shares • Increased shareholder value • Improved valuation • Succession Planning • A path to mergers and acquisitions • Higher corporate profile • Alignment of employee interest/management interests • Institutional investment • Reassurance of customers and suppliers

  9. The pros and cons of listing (cont) • Disadvantages • Loss of control • Dealing with shareholders' expectations • Restrictions on selling shares • Enhanced Disclosure • Limits on management's freedom to act • Initial and ongoing expenses • Continuous disclosure

  10. Listing Requirements (ASX) • Min market capitalisation 1 Net Tangible Assets: Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents, and trademarks, minus all liabilities and the par value of preferred stock. Also called net asset value and book value. 2 Market Capitalisation is the value of the company expressed as the told number of shares on issue multiplied by the issue price.

  11. Listing Requirements (ASX) (cont) • Min number of shareholding 1Number of shareholders required to hold a parcel of shares with a value of at least $2,000 2Free float (% of securities held by non – related parties of the company)

  12. Listing Requirements(ASX)(cont • Working capital requirements following listing • At least $1.5 million • Or if it is not, it would be at least $1.5 million if the entity’s budgeted revenue for the first full financial year that ends after listing was included in the working capital

  13. Listing Requirements(ASX)(cont) • Relevant escrow considerations • The ASX may restrict the transfer of shares known as “escrow” issued before the listing so that they cannot be sold for a period of up to two years after listing

  14. Listing Requirements (ASX)(cont) • What is a Prospectus? • A document issued by a company setting out the terms of its equity issue • Must be lodged with both the Australian Securities and Investments Commission (ASIC) and ASX • What information is required in a prospectus? • To help make an informed assessment of: • the assets of and liabilities, financial position, profits and losses and prospects of the corporation; • the rights attaching to the shares of the corporation; and • the merits of participating in the Company and the extent of the risks involved in the participation.

  15. Listing Requirements (ASX)(cont) • Recent ASIC approach • Focus on clear, concise and effective disclosure: plain language, active voice, short sentences, avoid repetition, explain complex information, including technical terms • Key information about the issuer and offer in a balanced way • More focus on key risks, specific rather than general risks and balance of benefits and risks • Explaining business model- more disclosure about directors and key managers

  16. The Listing Process

  17. ASX or APX? • ASX (Australian Securities Exchange) • A licensed operator of markets and clearing and settlement facilities in Australia • Top 10 measured by market capitalisation • APX (Asia Pacific Stock Exchange) • APX is a securities exchange with a market licence granted by ASIC , aiming to trade in Australian dollars & RMB • APX is in the process of developing a Chinese RMB board, will assist: • APX listing companies to raise capital using Chinese RMB; and • Chinese investors to trade in RMB via online trading platform for APX listed companies.

  18. ASX or APX? (cont) • Why Sponsors are required by APX for its Listees? • A listee must include certain documents signed by an APX Sponsor • APX will liaise between the potential listee and the Sponsor • What Sponsors do? • During the first two years after IPO, the listee must engage a sponsor to advise it in relation to its obligations under the APX Listing Rules

  19. Criteria of ASX vs. APX

  20. Thank you MICHAEL HANSEL, PARTNER Phone +61 7 3024 0328 Email m.hansel@hopgoodganim.com.au www.hopgoodganim.com.au

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