Advantages and disadvantages of ASX listing
The Australian Stock Exchange (ASX) has 2,200 listed companies, an average daily turnover of A$5 billion and a market capitalisation of around A$1.6 trillion. The ASX listing of a company provides access to capital and provides the opportunity to build a really big business. Listing shares on an exchange provides investors with the ability to buy and sell the company’s shares easily, and this liquidity in turn makes the company’s shares more attractive to potential investors.
The advantages of ASX listing include:
- Access to capital for growth.
- Currency for external growth.
- Higher public and investor profile.
- Improved valuation.
- Secondary market for the company’s shares.
- Alignment of employee and management interests.
The disadvantages of ASX listing include:
- High cost of listing and ongoing fees.
- Share price affected by market conditions.
- Media exposure.
- Higher levels of accountability.
- Director responsibilities.
- Reduced level of control.
The listing process with the ASX is a seven-step process that normally takes four to six months. The steps involved are: (1) appointing advisors, (2) preparing the prospectus and due diligence, (3) commencing institutional marketing, (4) lodgement of prospectus with ASIC, (5) lodgement of listing application with ASX, (6) marketing and offer period, and (7) closing the offer. Further details are available at www. asx.com.au