PrimaryMarkets executive chair Jamie Green
Growing companies are increasingly looking for alternatives to the Australian Securities Exchange for capital raising, and one that has become more prominent recently is PrimaryMarkets, a platform for unlisted companies.
PrimaryMarkets is home to a couple of financial services companies that have recently delisted from the ASX, data services company 9Spokes and payments company Mint Payments.
And it is home to start-ups like Flash Payments, a fintech in the cross-border payments market, that launched a $5 million capital raising on the platform last month.
The PrimaryMarkets Trading Hub was launched in 2016. It hosts more than 100 companies, providing a secure and controlled platform where shareholders can trade.
PrimaryMarkets executive chair Jamie Green said it offers a bespoke service, allowing each company that uses the platform to set their own conditions. For example, some companies offer daily trading in their shares, while others might have a trading window for a few weeks each quarter.
PrimaryMarkets encourages regular disclosure and recommends that companies follow the requirements of the Corporations Act. It expects any reporting to ASIC to be copied onto the PrimaryMarkets site. But otherwise companies have plenty of discretion as to the extent of reporting.
And they can set rules for who trades their shares. At its broadest, shareholders of a company that has moved off the ASX can continue to trade their shares.
The pharmacy group Blooms uses the platform to offer trading in its shares to existing shareholders and working pharmacists.
Green said the companies using the platform already exist and their shareholdings already exist. PrimaryMarkets provides a platform for shareholders to trade and for companies to raise capital. The platform is more like a bulletin board than an equity market.
The total market capitalisation of the ASX fell by around 2 per cent in the 2022/23 financial year, as some large companies went private and there were few initial public offerings.
Green said it is very hard for small companies to raise capital on the ASX. If there is limited liquidity, brokers are not interested.
“We have a steady flow of inquiries about using the platform and we have a steady flow of capital raisings,” he said.
“Coming to us may not make it any easier but we provide an alternative distribution channel at a lower cost. Most of the capital raised through the platform is early stage growth funding.”
PrimaryMarkets was home to Tyro before it listed on the ASX. Australian Independent Rural Retailers was on PrimaryMarkets until it was acquired by Elders in 2019. Animoca Brands commenced trading on PrimaryMarkets in July 2020, following its delisting from the ASX in March of that year.
Mint Payments listed on the ASX in 2007 and delisted in 2020. With a market capitalisation of $18 million at the time of delisting, the company said it could reduce costs and have greater strategic flexibility as an unlisted company.
Mint moved to PrimaryMarkets earlier this year to provide a trading facility for shareholders.
Data services company 9Spokes, which has a number of financial services company clients, delisted from the ASX in November and resurfaced on PrimaryMarkets, in April.
The move to delist 9Spokes followed a strategic review of the loss-making company. Its reasons for delisting included the high costs associated with listing, the illiquidity of its stock and its inability to raise capital on the public equity market.
Green said: “The ASX has made life difficult for micro caps because of its arduous listing process. It is no surprise they are looking elsewhere.”