On-Market BookBuilds in battle to attract big deals

The first company to raise money for its IPO through the platform, China-backed U&D Coal , quickly tanked after listing, taking the inglorious title of worst new listing of 2013. This was bad for publicity, but the negative ­association is unfair, argues On-Market BookBuilds’ chief executive, Ben Bucknell . “No one blames the ASX if an IPO doesn’t perform well; people need to understand that in the same way we are just a platform for deals," Mr ­Bucknell said.

The second IPO raised through the On-Market BookBuilds platform was Stavely Minerals . Three more IPOs were originally slated to raise money through the service in late 2014. An offer from Aeeris has been extended, while Martin Aircraft and Jacana Minerals will now pursue alternative avenues to raise their IPO capital.

Mr Bucknell is on a mission to persuade bigger companies to use the service in 2015, but faces staunch resistance from the investment banking establishment that usually manages these larger transactions.

“If I am running a $300 million ­placement, as opposed to a $20 million placement, there is really nothing the On-Market BookBuilds service offers that I can’t get from just phoning around a bunch of other brokers," said one senior banker, who asked to remain anonymous.

One common reason cited by equity capital market bankers and brokers that run large deals as to why they are reluctant to use On-Market BookBuilds is that it reduces their power to pick and choose who is allocated a stake.

“It is notable that in 2014, which was one of the busiest years for IPOs, so few issuers were prepared to use a ­mechanism that demanded they give up control of the allocation process," UBS co-head of equity capital markets Simon Cox said.

The service does have its supporters thought. Veteran fund managers Geoff Wilson of WAM Capital and Karl ­Siegling of Cadence Capital both chose to use it when they wanted to raise ­additional equity for their listed ­investment companies.

CMC Markets director of stockbroking Andy Rogers is supportive of it, ­particularly as a new opportunity for non-institutional investors who are often locked-out of IPOs, by allowing any broker to bid on a deal.

“We think the service has got legs and are very supportive of it," Mr ­Rogers said. “The mechanism is simple for brokers to use and is very attractive for end clients managing their own self-managed super funds – particularly when in terms of the access it provides them to participating in IPOs."

Mr Rogers agreed that it is vital the service succeed in winning big deals if it wants to grow in 2015.

“It would be great to see a couple of big transactions go through On-Market BookBuilds to help raise the profile of the platform".