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Monday
28 July 2014
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Investment matchmaker debuts sophisticated offerings

A DISCREET portal designed to match up sophisticated foreign investors and Australia-based companies looking for a cash injection has been launched online. Amanda Ellis takes a look at AustraliaInvest.

The AustraliaInvest website

The service was launched last month and promotes opportunities to invest in Australian companies to professional and strategic foreign investors, Australia Invest managing director Dean B Fraser told BTN.

“It’s a portal designed to tap overseas funds,” he explained.

So far, the newly formed investment matchmaker has recruited 11 companies to its stable – six are listed on the Australian Securities Exchange and five are private companies.

In total, these companies are seeking to raise $A245 million.

Three are listed biotechnology companies.

“A lot of the biotechs, in particular, and a lot of the mining and energy-focused companies, they may be able to raise five to ten million dollars from their own shareholders, but in general it can be quite difficult for them to raise significantly more than that,” Fraser said.

Although biotechs often had a number of products or technologies, they may not be able to pursue all of those at one time without sufficient funding to do so, he observed.

While rights issues and share purchase plans were options available, Fraser said shareholders in miners and biotechs at the smaller end of the market capitalisation level were sometimes “quite tired”.

He said these smaller companies with a market capitalisation of less than $40 million found it difficult to raise bigger funding amounts from the local market.

“It is very difficult for them to raise $15 million or $20 million – those sorts of amounts.

“In my opinion, the SME biotechs and junior miners have to look overseas for money.”

In the past 12 months, demand from overseas investors wanting to invest in Australia has increased.

“There is a lot of demand from overseas investors who want to get invested into Australian businesses,” Fraser said.

“A lot of people see Australia as a hotbed of biotechs, but it can be challenging for foreign investors to identify the right opportunities in Australia.”

AustraliaInvest aims to fill that gap and help foreign investors find out who is looking for capital and who would be open to receiving that capital from overseas.

The portal publicly presents a small amount of information on companies looking for capital – their industry, a two or three-line description of the business, and the date their proposal was submitted.

Registering as an investor

Prospective investors must register for the service before they can find out more information.

“There is quite a strict requirement on us to make sure that they are professional or strategic foreign investors, and to make sure that they are also legitimate,” Fraser said.

They can then make contact through the portal and get a lot more information on the company – an up to 400-word summary of an opportunity, a disclosure of how much money is being sought, by when, and what type of capital is being sought e.g. equity or a hybrid – but not the name of the company.

“This will give the foreign investor enough information to know if it is potentially interesting to them.”

The investor can then click on a “connect now” button and send an email to the Australian company and prospective investor via the portal.

Advisers can then be appointed, if desired.

“We are not trying to remove advisers, we are basically trying to enable small and medium-sized biotechs, explorers and miners to more effectively and easily tap into the foreign investor market because we think there is a real interest based on recent experience,” Fraser said.

Predicting a currency gain

Fraser told BTN a lot of foreign investors, particularly those in the United States, were taking the view that the Australian dollar will go to parity and beyond, against the US dollar.

“If they like the biotech and they think it’s got good technology, they will invest in the company and make money out of that, because they think the technology will work and will prove to be fruitful.”

However, some investors are expecting the Australian dollar to appreciate against a falling US dollar, and expect to make a further gain from the Australian dollar appreciation, Fraser said.

To view the AustraliaInvest portal, visit www.australiainvest.com.au.

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