Newly launched corporate advisory practice Cube Capital wants to capitalise on the boom in technology and healthcare stocks and take them public.
Based in Sydney’s CBD, Cube Capital specialises in M&A (mergers and acquisitions) deals, divestments, public listings and capital raising. The firm is targeting middle market investment transactions within the TMT (telecommunications, media and technology), life sciences and healthcare sectors.
Cube Capital was founded by entrepreneur and global technology executive Hani Iskander who, in a media statement, said that now is the time for tech companies to leverage the ASX’s shift in focus from the mining boom to the tech boom. He added that investors currently have an appetite for deal flow, transactions and the next big thing.
“Australia’s tech sector is huge. It’s worth over $100 billion and about 5 percent of Australia’s GDP (Gross Domestic Product). However there are only 41 companies listed on the ASX with a market capitalisation of more than $100 million. Only 54 companies exceed $50 million in market capitalisation. There is room to double the number of tech companies on the ASX in the next four to five years if and when we can help guide them through a listing.”
“With the ASX focusing on shifting from the mining boom to the tech boom, now is an opportunity for Australian tech companies to develop strategies to enter this growing market.”
Although headlines would have you believe that more and more tech companies are listing on the ASX as a financial growth strategy and alternative to VC investment, Cube Capital believes there are three key reasons as to why more tech companies aren’t going public.
- Founders knowledge gap – they often find themselves in a situation where they don’t know what to do and who to go to.
- Reluctance by founders to be held ‘accountable’. There is a need for annual audits and establish a professional board of directors.
- Fear by founders of having to answer to public shareholders. There is a need to perform to plans and expectations, and to be measured publicly against peers.
Some benefits of becoming a public company, as listed by Cube Capital is:
- Increase the capital on the company’s balance sheet by raising capital for faster organic growth and by acquisitions.
- Grow the company’s valuation. A privately-held company’s valuation is usually half of what it could be if it were a public company.
- Divest equity at anytime in small or large parcels. Today, as a private company, founders cannot easily sell 10% or 20% of their shareholding. When trading on the ASX you can sell 1%, 5% or 20%.
- Immediately gain more prestige, visibility and respect by clients and business partners as an ASX company. Prospective clients, especially large ones like government departments and corporates give more credence to suppliers of products and services when they’re public companies.
What gives Cube Capital a degree of credibility is the expertise behind it. The partners have considerable experience in the technology industry and are familiar with how Asian markets operate. Founder Iskander has over 18 years of experience in the software industry and has been President of Asia Pacific and Japan with two NASDAQ-listed technology companies.
Partner Susan Lay has 20 years of experience in corporate advisory services in both Australia and Asia and was the principal of Commercial Instincts and advisor to several Asian and multinational corporations across south east Asia. Her expertise in the technology sector lies in supply chain management, ecommerce, multimedia and trading exchanges.
The youngest of the partners is Kashif Ansari, who has worked across a number of industries, specialising in the technology and telecommunications sectors. Prior to his investment banking experience, Kashif worked for technology startups and co-founded a Dubai based software-consulting firm.
Cube Capital is targeting innovators with high-growth plans.