A defining feature of the post-COVID bull market for ASX stocks has been the level of fund-raising activity in equity capital markets.

The combination of COVID-19 with temporary regulations allowing super-sized placements resulted in ASX-listed companies issuing more than $65 billion via placements and the largest 300 companies issuing $4.9 billion via Share Purchase Plans (SPPs) in the 12 months to 31 March 2021.

And on average, investors who participated were able to acquire shares at an average discount of 10% to the previous trading price.

It got the team at investment platform OnMarket thinking; what if there are new ways to give retail investors better access to discounted ASX capital raisings?

The result is SPP Harvester – an innovative new investment vehicle that offers simple and diversified access to share purchase plans (SPPs) when ASX companies raise extra funds.


How it works

Most capital raisings include a share placement, which are typically reserved for large institutional investors.

But many share placements are accompanied by SPPs, where any retail investor who holds at least one share in the company can participate.

When an investor opens an account with SPP Harvester, the platform automatically buys one share of each company in the ‘SPP300’ – a selection of companies comprising 300 quality and highly liquid ASX stocks.

Each share is registered beneficially in the investor’s name, with custodian duties managed by multinational banking group BNP Paribas.

Every time an SPP300 company initiates a share purchase plan, SPP Harvester automatically analyses whether the SPP is in-the-money at the time of application.

It then applies for new shares in the SPP and sells them after they are issued. The funds are then returned to the investor’s account to reinvest in the next SPP that comes along.

Each investor has access to an individual portal to measure the performance of their portfolio, as well as add/withdraw funds.


SPP access – streamlined

In the detailed product description summary on its website, OnMarket highlights how SPP Harvester gives retail investors simple access to the returns on offer from ASX equity raisings.

Acting individually, an investor needs to buy a minimum market parcel of $500. This means to get an SPP interest in 300 of the largest ASX companies, an investor would have to make a minimum  capital outlay of $150,000 just to get access.

Retail investors would also be charged brokerage twice – on both the buy and sell order.

Interested investors can apply for SPP Harvester with only $8,000.  $4,000 is used to purchase the portfolio, leaving $4,000 cash in the investor’s account to apply for SPPs..

Most SPPs give eligible shareholders to opportunity to apply for up to $30,000 worth of shares.  Investors can top up or withdraw from their cash account at any time.

And as a new financial year approaches, OnMarket is offering a $3,300 discount on brokerage fees to all applicants who sign up before June 30.

Commenting on the SPP Harvester program, OnMarket CEO Ben Bucknell said the management team expects to see more activity in the months ahead as capital markets activity remains robust.

“Since we launched SPP Harvester a tear ago, we have invested in 44 SPPs: 41 have harvested a profit, and only 3 have made losses.  We keep our website updated for every SPP that we harvest, showing the returns, which have been exceptional”, Bucknell said.

“With reporting season about to get underway, the pandemic continues to disrupt the real economy, but equity markets remain strong,” he said.

Clients only have to pay for the 300 shares that they will own. We are waiving all the brokerage on buying the 300 1-share positions for anyone that applies to join SPP Harvester before 30 June. Previously, brokerage was $10/trade (plus GST). That means clients are saving $3,300 costs on establishing the SPP300 portfolio.

To learn more about the SPP Harvester platform, visit the OnMarket website for further detailed analysis.

This article was developed in collaboration with OnMarket, 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.