Access to placements run by ASX listed companies have traditionally been exclusive to clients of the broker lucky enough to get hired but that’s been changing in recent years.
Platforms such as Fresh Equities and 180 Markets have given a broader range of ASX investors access to capital raisings – particularly placements as well as IPOs.
And these platforms have timed their run perfectly in the context of the latest bull run for the equity markets and heavy demand for investment opportunities.
2020 saw the highest amount raised by ASX companies in five years – totalling over $51 billion – and 2021 has begun on a similarly strong note.
Unfair to exclude most investors
Ben Williamsom co-founded Fresh Equities in September 2018 after believing it wasn’t fair that most investors didn’t get access to ASX capital raisings.
“We saw investors online watching companies enter trading halts, disappointed that they weren’t able to participate in a raise as they simply weren’t made aware of the opportunity. They’d say ‘I’m a holder, I love the company but I’m obviously not on the right list today and I just can’t get access to this thing that I already know and hold’,” Williamson said.
“And we didn’t gel with that – that’s not really something that seems fair to us.”
“Since then we have helped investors get access to just under 1100 transactions, and with a real focus on investors rather than traders. We’re interested in people who want to back growth companies and invest in them to help them deliver on their goals.”
Shaun Factor, co-founder of 180 Markets, concurs. His platform goes a step further and allows retail investors access to deals as well.
“The reason we started was to create a level playing field so retail investors could get easier and fairer access to capital raises,” he said.
“The majority of our deals are placements but have been offering IPOs too, and retail investors getting into IPOs, and now pre-IPOs and unlisted companies as well.
“We’ve created this DIY platform where investors get access to as many capital raises as we can get them and our goal is to get access to every capital raise be it placements or IPOs.”
The top ASX capital raisings on 180 Markets
Stockhead asked the pair about what sectors and deals have been most popular with their clientele.
180 Markets has seen persistent interest in the battery metals sector and a couple of companies have done particularly well for their clients, particularly thanks to options attached to the shares.
“One of our graphite stocks we did a raise for, Rensascor (ASX:RNU), has gone up 10 times and investors received free options there too – so investors really liked that sector.
“There’s been a lot of hype around the whole batteries sector, so we were managers at 1 cent, the stock is trading at 11 cents. If they held onto that with the options they’d be up 18 times their money – that’s one sector that’s heating up.
“Another company was Australian Vanadium (ASX:AVL) – if investors held onto the free options as well as the shares they’d be doubling their money in a very short period of time.”
Factor also noted oil and gas, particularly microcaps, have been heating up in recent weeks.
“88 Energy (ASX:88E) was the one that started it all off and the others followed,” he said.
“We helped raise capital for Red Sky Energy (ASX:ROG) at 0.2 cents; that’s now trading five times at 1 cent so that’s been the most recent one to go up a lot.”
The top ASX capital raisings on Fresh Equities
Fresh Equities has also seen some hot deals in the battery metals sector.
“A good example would be Lake Resources (ASX:LKE) who we’ve worked with for a number of years now and played a big role in their past couple of raises. You could’ve gone in at 3 cents at August and now they’re sitting at 30,” Williamson said.
“Some of our clients who invested have made over 900 per cent over the past few months – it’s very impressive.”
Williamson singled out Zip (ASX:Z1P) as one noteworthy transaction.
The BNPL company raised capital in mid-2020 and again in Janaury 2021 – with the latter transaction opening and closing in just 90 minutes.
“That was, and still is, an amazing growth story – with Zip expanding organically and inorganically. We were able to speak to Larry Diamond and Tommy Mermelshtayn (head of strategy) from Zip to get an understanding of the planned growth and share that with a wider audience, who enthusiastically supported them,” he said.
“Even though they’ve come back a bit – that deal was sub $6 and now it’s $9.50 today.”
But not all companies are walking the talk.
“We are really driven to increase transparency at the tail end of the market, where stocks and stories can be more easily manipulated and, in some cases, fabricated,” Williamson said.
“You really have to look at the story, the people, the use of funds and see where the money is planned to go. We track all past raises and presentations to allow investors to look back at promises by companies, keeping them accountable.
“If you find a good track record, and the raise is going into growth, odds are you’re onto a winner,” he said.
Calls for the ASX to step in
While Factor is happy with the growth seen, he’d like more to be done from the bourse to help ASX investors access capital raisings.
“We would like further changes making it compulsory for brokers to give access to all investors because there’s a lot of favouring [of] big brokers and current investors,” he said.
“The market is there for every investor to buy and sell stocks, the same should apply for capital raises.
“So we would welcome more intervention by the ASX making it easier for every investor to have access to every capital raise.”
When asked about his position, Fresh Equities’ Williamson explained he supports increased fairness and participation in the capital markets, which was the reason they started.
However believes the best solution will be one that’s able to work without further regulation and in the best interest of companies and investors.