Speaking on a recent episode of Relative Return Insider, AMP chief economist Shane Oliver said allowing companies to float simultaneously on the ASX and offshore exchanges such as Nasdaq could help revitalise Australia’s dwindling IPO pipeline, provided regulatory hurdles can be managed.
Oliver’s comments follow recent reports that the ASX and ASIC are exploring the possibility of permitting “double IPOs” – where companies would list in Australia and overseas at the same time, rather than taking the traditional route of listing locally before pursuing a secondary foreign float.
Namely, The Australian Financial Review reported this week that the ASX and the corporate regulator are engaging in talks with software company Rokt about becoming the first company to have an initial public offering across both the ASX and Nasdaq.
“Conceivably it can work … I don’t see anything wrong with it,” Oliver said.
He explained that simultaneous IPOs could act as a “natural extension” of dual listings.
“I think it’s probably a good idea because it does expand dramatically the investor base across the two exchanges. The US is a much bigger market in terms of investors, so that’s good news,” he said.
Oliver added that any concerns over pricing mismatches between the two markets could be managed by arbitrage, while differences in disclosure standards would likely see the tougher regime prevail.
“There may be issues in the listing requirements, maybe laxer or tougher,” he said. “So obviously the tougher of the two would probably have to prevail here and maybe ASIC would insist on that anyway.”
With IPO activity on the ASX at multi-year lows, Oliver said reforms that broaden access to deeper pools of capital could make the local market more competitive.
While Australia has a strong track record in invention and research, he suggested the development and commercialisation phase – turning ideas into marketable products – often requires long-term investment.
“Australia’s good at inventing things, but often you’ve got to go to the US to get access to more patient capital. Having Nasdaq shareholders on the register from the start could help,” he said.
Ultimately, Oliver said such a structure could improve the depth of a company’s investor base and provide flexibility in raising capital.
As he noted: “I think it can be done and it does have the advantage of improving the depth of the investor base for the company, which is probably why they want to consider it rather than just having an Australian base.”
The corporate regulator is set to release a report in the coming months, which is expected not only to address the broader capital markets landscape but also to outline ASIC’s efforts to streamline dual listings for foreign companies – a move that could help address Australia’s shrinking pool of listed companies.
