ASX to Get Into the IPO Game

In a challenge to the investment banks that control the capital-raising process for companies, the Australian Securities Exchange (ASX) has announced plans to offer its own bookbuilds at a facility on the exchange. It says the move will increase transparency in the primary markets and open share buys to investors beyond a single broker's customer base.

The pricing and allocation method for ASX BookBuild, expected to be operational prior to the end of 2012, will be based on the intellectual property of On-Market BookBuilds, an Australian vendor.

ASX BookBuild will add to the capital raising options for companies and for the first time will allow a bookbuild to be conducted electronically on-market using ASX technology. Companies using ASX BookBuild will continue to appoint a lead manager to act as their agent in the conduct of the offer of securities and to manage the bookbuild process. Any ASX participant will be able to electronically submit bids on behalf of their eligible clients in ASX BookBuild. Settlement of thee allocations, it says, will occur in the same manner as for any off-market bookbuild.

"The ASX BookBuild initiative will improve the transparency and efficiency of raising capital in Australia, and strengthen our competitiveness as a regional center for raising capital," says ASX deputy CEO Peter Hiom. "ASX is determined that Australia should remain a leading market in which to list and raise capital, and is continuing to invest in its listings and issuer services to ensure it meets the needs of the 2,200 listed businesses that want to access capital to fund their growth."