Raising funds on the unlisted market

Despite the tough financial conditions over the past year or so, the Australian Small Scale Offerings Board is continuing to raise money for its existing and newly listed companies, many of them smaller companies. To date more than $100 million has been raised for a range of businesses. By Bruce Nelson.

WHEN INNOVATIVE food and beverage company Preshafood closed its investment offer through the Australian Small Scale Offerings Board (ASSOB) having received over-subscriptions of $1 million recently, the signs of renewed investor confidence were clearly evident.

Preshafood has since had to return the excess funds (there was no provision for over-subscriptions in its offer) and couldn’t be happier with the result. Its capital raising exercise was not only successful, but also provided a litmus test for investment appetite in Australia’s billion dollar unlisted companies sector.

Preshafood Limited is a food and beverage company using a revolutionary high pressure processing (HPP) method to produce fruit juices, coulis and food products. The company was established in 2006 and has been manufacturing HPP products since early 2007 with their first commercial product an apricot, peach and apple mix for yoghurt, the world’s first HPP fruit product used in the dairy industry.

Simon Ward, managing director of Melbourne-based Tauro Capital Partners who facilitated the capital raising through the ASSOB platform, says while the results for Preshafood were outstanding, there were a number of factors that facilitated the matters success.
“Preshafood is an excellent company that is in exactly the right stage of its lifecycle to seek capital to expand its business and cement its position as a significant player in the highly competitive and developed non-alcoholic beverages industry,” Ward says.

“They recently won first prize in both the ‘Best New Juice and Juice Drink’ and the ‘Best New Beverage Concept’ categories in the prestigious International Drinktec Award in Germany, beating other entrants including beverage giant PepsiCo. However accessing growth capital has not been that easy given the recent credit crunch, so utilising an established platform such as ASSOB provided the right compliance model which in turn gave that extra level of comfort for potential investors.”

Investment nich

e ASSOB has carved out a niche assisting unlisted companies such as Preshafood raise capital typically between $200,000 and $10 million plus. The concept, first conceived by businessman Tony Puls in 1987, was to create a platform that would allow unlisted companies to easily access private capital. His dream was achieved when ASIC issued a Class Order exemption ten years later, allowing for the formation of a trading and investment platform for small companies.

In 2004 ASSOB was formed and since then has evolved into the country’s largest unlisted securities platform for showcasing investment opportunities in high-growth, unlisted Australian companies. The platform has represented over 200 companies and raised over $100 million and provided compliance services and a range of tools from which to raise capital and inform potential investors about investment opportunities.

Presently there are over 60 companies listed, including 22 companies listed in VIP mode, a service that provides a private listing to a select group of investors prior to going public on the ASSOB Primary Board.

The companies listed on ASSOB have a combined market capitalisation based on their last share sale of over $500 million, and are raising equity through a pool of over 11,500 subscribers to the ASSOB database, a mix of sophisticated investors, high net-worth individuals, institutional investors, overseas investors and self managed super funds.

ASSOB CEO Paul Niederer says the private company sector makes up 43 per cent of Australia’s GDP and is a substantial contributor to the economy in terms of both finance and employment. “For a long time now the sector has not been properly understood and many Australian companies have had limited access to financing and investment funds to commercialise technology or grow their businesses,” Mr Niederer says.

“This has led to some of our best ideas and brightest people heading offshore, taking with them our future economic growth and job opportunities. This changed with the emergence of ASSOB which is now the largest capital raising platform for unlisted companies in Australia, and the only one with a secondary board providing investors with a potential exit without having to wait for a trade-sale, stock exchange listing or other liquidity event.”

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