Fresh Equities wants companies to rethink how they engage with investors, who are looking for different ways to invest in volatile markets.

Share purchase plans and entitlement offers are set to be a favoured raising structure with capital markets transaction volume down almost 50% over the past couple of years, according to Fresh Equities.

Fresh Equities founder and CEO Ben Williamson thinks companies are going to have to think outside the box if they want to stay connected with investors when it comes to raising capital.

“We are seeing a large intake of retail investors who are increasingly wanting access to more types of investment opportunities,” Williamson told Stockhead.

“This fragmentation of investor attention means that companies will need to change how they connect with their investors in order to continue to provide value to them.”

Founded in 2018, Fresh Equities provides an online marketplace for institutions, family offices and high net worth individuals to explore and engage with listed capital raises.

Fresh Equities’ goal is to foster a greater connection between companies and more investors through technology.

Engage with shareholders

Williamson said companies need to better communicate with their entire shareholder registry, and not just the top 20.

“80% of volume traded really comes from that bottom 20% held,” he said.

“This group are generally less engaged, don’t understand the company’s story as much, and as a result can be more volatile investors.”

He said institutional players are all known and easier to engage with than individuals for companies.

Williamson said this is on the company to better engage and take those less engaged, but just as important shareholders on a journey.

“Blasting out through the ASX might not be enough – it’s about consistent communication and taking investors on the same journey as senior management and institutions.”

Market volatility changes play

Fresh Equities Head of Commercial Alex Stella said market volatility caused by geopolitical tensions and a swag of economic factors is having an impact on investment.

“Capital markets transaction volume is down almost 50% from 2020/21 levels,” Stella said.

“We believe that M&A activity will continue to increase and will drive capital raises in 2022.

He expects an increasing number of entitlement offers and SPPs to take place.

“We expect entitlement offers and share purchase plans to be a favoured raising structure.”

On the wrong list

Williamson said many investors are missing out on opportunities simply because they are on a wrong list or unaware of raises and companies are therefore missing out on their funds.

“When a company engages a lead broker to market its share issue, the pool of potential investors is restricted to that broker’s network,” he said.

“Fresh Equities gives the lead brokerage managing a placement the chance to offer shares outside the broker’s network.

Williamson said the company was looking at expanding its already considerable proprietary data pool and technology to help companies connect with existing and new investors and is not in competition with stockbrokers.

“Our goal isn’t to disrupt anyone, and we don’t think of ourselves as a broker,” he said.

“Our goal is to give companies more control when it comes to raising capital, and we do that by broadening their options.”

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This article was developed in collaboration with Fresh Equities, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.