“The increase in overhead in running an ASX company compared to 2005 is extraordinary.
“The risks to directors are fast approaching the point where it is just not worth the reward. That’s why the ASX is losing so many companies both small and large to [private equity] and why founders like me are preferring to keep our (new) businesses private.”
A former ASX chairman, who asked not to be named, said no one in their “right mind” who had made money would want to be a listed company director now.
“People with something to give do not want to be in the sights of the class action vultures,” they said.
“These security actions work in favour of big companies and affect the small players who are trying to innovate and compete.
“Bottom dweller law firms just trawl the ASX looking for a share price fall and then back solve a continuous disclosure breach. The state and federal governments won’t touch them.”
The comments echo those of leading chairman Graham Bradley, who also warned “the growing governance challenges and related costs of being a listed company over recent years have deterred many business owners from turning to the listed market for growth capital”.
Mr Bassat, co-founder of Square Peg Capital, said the decline in the ASX was cyclical and structural.
He said the cyclical trend was fewer IPOs globally, which would reverse “at some point”. But the structural question remained over whether the ASX was an attractive venue for IPOs.
“My expectation is that among Australian start-ups, we will see a mix of companies who look to list locally and globally,” he told the Financial Review.
“The largest and most global start-ups will likely list on the Nasdaq or NYSE, but many Australian start-ups will view the ASX as the logical venue for an IPO.”
Square Peg Capital’s Paul Bassat. Wayne Taylor
WiseTech founder Mr White was also more optimistic and said he would not change his decision to list on the ASX if he had his time again.
“We knew that we would need to be a public company, for the transparency and trust that created, for the stock liquidity and pricing of a listed company and for the ability to use shares to acquire, grow, attract, retain and reward staff and raise capital,” he told the Financial Review.
“We had two choices: relocate the key executive and investor relations team and the centre of the business to the US and move to quarterly reporting, or continue to build the business from Australia via a listing on the ASX.”
But Mr White said improvements to the ASX should be made.
“We should be innovators in capital markets. In most developed economies, public markets are strong and there is a lot of competitive tension between different exchanges and exchanges in different regions,” he said.
