Swipe right for deals

A new product launched yesterday aims to give retail investors equal footing with their institutional brothers in primary market placements. 

‘Why does IPO stand for initial public offering when there is no element of an offer to the public?’, asked chief executive Ben Bucknell as he launched OnMarket alongside Prime Minister Malcolm Turnbull. Considering the PM’s past as an executive of Goldman Sachs, he probably has a few friends who could answer that question. Public means that’s how the shares will be traded, but they’re typically allocated between brokers and their key institutional customers.

OnMarket removes this inequality by allowing the same access to everyone who uses its app, whether an institutional or retail investor. Now Jane Smith can buy shares in an IPO at the same price as Lloyd Blankfein.

How does it work?

A company will allocate OnMarket a percentage of the shares on offer. Users of OnMarket will then be sent an alert to their smartphones advising that the offer is live and that they can go in and check it out.

The OnMarket app is free and available on both Android and Apple smartphone devices. It can be found in their respective app stores or through the company website. After downloading the app to your phone, you will have to perform a quick sign up process.

Once you are logged in, set up your investing profile and you’re ready to swipe through the list of live offers until you see one you like, as if they were pictures of people on Tinder.

When you find an IPO of interest, you’ll be able to access company information, the deal prospectus and independent research (including potentially from Intelligent Investor) to help you decide if you wish to take part. Simply click ‘bid’ and enter the amount of shares you wish to purchase and you’re done. You will be provided with payment details so you can send in your money – by BPay or otherwise – and have your bid confirmed.

Another interesting function is the ‘campaigns’ feature. This will show articles concerning rumoured or announced future placements and ask whether you are interested in being part of it. This will allow the OnMarket team to show demand from its members and hopefully increase the amount of companies who will use the platform in the future.

Users of the app will also receive a reward for signing up of $500. This will be added to your rewards balance and result in the allocation of extra shares in the offers you bid for. There are also ongoing programs such as rewards for bringing in new members.

Which companies are participating?

So far, the OnMarket Bookbuilds platform has been used by many companies at the smaller end of the spectrum and the only live deal currently is the $20 million IPO of Bitcoin Group. The challenge for the company will be to attract the bigger players who usually have no problem finding institutional investors to give them money.

It has always been said that institutions get their favourable allocations, because it enables companies to raise money quickly and easily – but that argument is simply no longer valid. The app is free, easy to use and gives retail investors the chance to finally get treated as equals. Although there is no guarantee that OnMarket will be available for that one IPO or share placement you really wanted to be part of, at least if you have it at the ready you can take advantage if it is offered.

Staff members may own securities mentioned in this article.

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