ASX clampdown on tech IPOs could impact Southeast Asia’s startups

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Listing on the Australian Securities Exchange (ASX) might soon get much harder for tech companies, the Australian Financial Review reports today.

This won’t just affect Australian startups. Listing on the ASX has become a popular way for some Southeast Asian tech firms to raise money. At least five startups from the region chose the ASX to go IPO over the past couple of years.

See: Southeast Asia’s tech IPOs (INFOGRAPHIC)

Clampdown

The ASX has yet to make an official announcement about its plans, but the Financial Review cites a source who’s familiar with the new admissions laws being considered by the stock exchange and its regulator.

(Update May/11/2016: The ASX confirmed today that a consultation paper on the matter is going to be released by the end of the week and that there will be a period of consultation with the market before changes are made.)

Four of the upcoming six tech startup listings on the ASX have less than $100,000 in revenue.

The clampdown would see ASX raising the bar on the financial requirements companies need to achieve before they are allowed to list, among some other tweaks.

“It means that companies will need to raise more money, not just $2 million or $3 million [in Australian dollars] to list, probably around $10 million and that means their market capitalizations will have to be greater. This will remove the very early stage companies,” a source told the Financial Review. A$10 million is US$7.3 million.

“The trend towards early-stage tech listings has escalated recently, with four of the upcoming six tech company listings on the ASX having less than $140,000 revenue,” the Financial Review remarks. That’s just US$100,000.

This trend is what the ASX wants to regulate more tightly in order to prevent businesses with a high risk of falling behind investor expectations from going public.

Southeast Asia impact

Migme, a company headquartered in Singapore, listed on the ASX in 2014.

IPOs on the ASX have been particularly popular for Southeast Asian tech companies under the Catcha Group umbrella. This includes iProperty and Ensogo, which listed in 2007 and 2013, respectively.

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