OnMarket BookBuilds has issued an urgent call to action for the SMSF industry to block changes proposed by the Australian Securities Exchange (ASX) that will significantly reduce their already limited access to and participation in initial public offerings (IPO).
The current ASX listing requirements oblige each IPO to have 300 to 400 shareholders, however, the new rules will reduce the requirement to just 100 shareholders for large IPOs or 200 for small companies.
“The SMSF sector is the greatest beneficiary of what we’re arguing for,” OnMarket BookBuilds chief executive Ben Bucknell told selfmanagedsuper.
“Given the opportunity to participate in IPOs, SMSFs come to the party – the three examples of Telstra, Medibank and QR National illustrate how much demand is out there.
“If these rules go through, there will be even less retail and SMSF access to IPOs.
“We believe that if the SMSF sector was given a guaranteed fair process across every IPO, then that enormous amount of capital would actually reduce the cost of new equity for companies, which would have positive ramifications for the whole economy.”
OnMarket is running an online petition demanding fairer access to IPOs and submitted the document to the ASX at the close of the consultation period on Friday.
Over 1850 investors signed the petition in the span of a week.
“We will keep the petition open on our website,” Bucknell revealed.
“This absurd change has led us to realise that a light needs to be shone on the fact that even the present rules are not good enough, so we’re not just arguing against these changes, we’re going further than that.
“[What we’d like to see is] 25 per cent of every IPO must be reserved for bidders that bid less than $100,000 and if those retail bidders aren’t there, then the remainder of the 25 per cent that’s not taken up can be given to institutions.
“So it’s not an obligation to give 25 per cent to retail investors, it’s an obligation to reserve 25 per cent to retail investors, but we think that a simple 25 per cent and $100,000 limit is a way to engage the SMSF market.”
Further, he said the rules must allow retail and SMSF investors to participate in the 25 per cent irrespective of their broker.
“This is about retail access and that shouldn’t be defined by who your broker is,” he said.
“SMSFs need to come forward – this is the biggest potential opportunity for SMSFs to rally and make change.
“In the last 10 years, there’s been over 1000 IPOs. There’s an enormous prerogative for SMSFs here.
“We think we can do this and get the change, but we can’t unless we rally with the SMSF sector.”
The ASX made the listing proposals in its consultation paper, “Updating ASX’s admission requirements for listed entities”, released in April.
The petition can be found on the OnMarket website here.