Australia misses the mark again for the biggest IPOs next year.
You will be pleased to know that there are some interesting companies that are planning initial public offerings (IPOs) on the ASX in 2017.
Strata, a US-based software development company, will be the first virtual reality company to hit the Australian Securities Exchange (ASX). Strata has already reserved the ticker S3D and is expected to be listed in 2017. This young and ambitious company has a current valuation of AUD$73 million.
Strata is currently developing virtual reality software that will be compatible with popular virtual reality headsets. Virtual reality has taken the gaming industry by storm, and it has been viewed as the fourth technology revolution, after computers, the Internet, and smartphones. Almost all the global tech giants, such as Google, Apple and Sony, are investing heavily in virtual reality technology. Moreover, it is forecasted that by 2020, 22% of all Australians will own a virtual reality headset.
2. Straker Translations
Straker Translations, a New Zealand-based translation software development company, is planning to list on the ASX in 2017. Straker Translations bases their software upon artificial intelligence, and their software is currently used by more than 10,000 businesses worldwide. With the translation industry being valued at US$40 billion and with tech giants such as Google heavily investing in translation technology, Straker is currently taking a very ambitious acquisition strategy. Straker is expecting a valuation of AUD$100 million.
Seera, the self-proclaimed cloud-based all-in-one staff management platform, is also intending to debut on the ASX in 2017. Seera was founded by former Seek.com.au executive Bradley Birchall. Seera’s software differentiates itself from all other products in the market by catering to the entire employer-employee relationship, ranging from the recruitment ad up to tracking and providing data analytics on their performance. Seera’s product is currently serving major Australian companies and it is expecting an IPO valuation exceeding AUD$100 million.
International IPOs for 2017 – Great opportunities
A very simple way to diversify your share portfolio is by spreading your investments around the globe. Investing in international IPOs is an excellent way to obtain international exposure. The current year has been the slowest year for IPOs since the global financial crisis. This slowdown is due to market volatility as a result of Brexit and the American presidential elections.
Given the market situation, many companies that were considering going public are waiting to debut in 2017. Jackie Kelly from EY Americas points out that this means there will be plenty of “unicorns” in 2017. In the IPO world, “unicorns” are start-ups exceeding $1 billion in their valuation.
With the increasingly popularity of online brokerage platforms, exchange traded funds (ETF) and listed investment companies (LIC), you can very easily venture into and enjoy the upside of international markets.
The following list shows the unicorns we consider as the most promising. You won’t be surprised to see that many of these are tech companies owning your favourite apps.
International top picks
Since 2015, year after year, the market has been expecting the car-sharing giant Uber to go public. Uber is currently valued at over US$68 billion, making it the biggest IPO of the year if it chooses to finally make its move in 2017. In fact, it will also be one of the biggest IPOs ever issued, smashing the records set by both Facebook and Alibaba. Although its CEO has explicitly stated that he wants to postpone going public, Uber is under severe pressure due to its recent losses. Nevertheless, with its 20% commission rate, Uber is still an immensely profitable business and has been very successful in absorbing private capital. If Uber is to ever go public, then it will very likely do so in 2017.
Uber’s much smaller competitor, Lyft, is also rumoured to be preparing for an IPO. A leaked financial report indicates that Lyft is growing at an extremely fast pace. The market is currently valuing Lyft at approximately US$5 billion.
Snapchat, the picture sharing/message app, has exploded since its inception in 2013 and has become an international phenomenon with more than 100 million daily users. It is especially popular amongst millennials. There is some debate over the true valuation of the company, with figures ranging from US$25 billion to US$35 billion. Nevertheless, if it debuts in 2017, it will be the United States’ second largest technology IPO in history, only exceeded by its predecessor Facebook.
With a valuation of US$25 to $30 billion and a recent private equity rising of US$1.5 billion, Airbnb also has the potential to be one of the biggest IPOs of 2017. There is no other name like Airbnb in the temporary vacation rental world. It is often referred to as the “largest hotel in the world with over 2.3 million rooms”, spread across more than 40,000 cities around the globe.
5. Palantir Technologies
Little is known about the highly secretive data company Palantir Technologies besides the fact that it has the potential to be the biggest listing of 2017 and that it is sponsored by the CIA. It also provides services to the information arm of numerous governments and various classified companies. Although going public will inevitably bring about the demand for transparency, which the company wants to avoid at all cost, it is receiving increasing pressure from its investors.
Very similar to Snapchat, Pinterest remains one of the few major social media brands that remains in private hands. With its one-of-a-kind ability to cater to an unlimited number of hobby and interest groups, Pinterest has unlimited potential. Pinterest is regarded by the market as one of the fastest growing social media websites and is currently valued at more than US$10 billion.
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Investing in international shares
It has never been easier for you to invest in international IPOs and general shares. The majority, if not all, of Australian online platforms, including ComSec, E*Trade and CMC Markets, provide convenient access to major exchanges around the globe. Investing in international shares is very similar in process to investing in shares locally.
Investing in international markets will also provide you with countless additional benefits. If nothing else, it will provide you with the opportunity to further diversify your investment portfolio and decrease the risk involved.
Australia only constitutes 2% of the world’s share market. This means that if you only invest in companies listed on the ASX, you will be missing out on the remaining 98%. Moreover, Australia also lacks key sectors such as technology and pharmaceuticals. International markets will provide you with exposure to greater growth potential and the ability to invest in major global giants such as Google, Microsoft, and Facebook.
Aside from directly trading international shares, there are also other ways for you to obtain exposure to the international markets. However, you need to know that unlike shares, the historical performance of these investment vehicles cannot be used as indicators for future performance.
Investing in Exchange Traded Funds
Instead of directly holding a position in international shares, you can also invest in exchange traded funds (ETFs) that are listed on the ASX. An EFT allows you to obtain exposure to one or multiple international markets at a significantly lower cost than that charged by fund managers. In fact, EFTs are the most common way Australians invest in international markets.
Investing in ASX-listed investment companies
You can also obtain international exposure through international ASX-listed investment companies (ILIC) that invest in multiple international markets. You can view an ILIC as a basket of foreign shares selected by a professional investment manager. An ILIC behaves very much like an international share and it has the similar degree of liquidity. An ILIC might also pinpoint a specific geographic region, such as the Asian Masters Fund (AUF).
However, this strategy is only recommended for more sophisticated investors. ILICs charge high management fees and the only way for you to reap a profit is through purchasing them at a price substantially lower than the worth of their pre-tax net tangible assets.