This was shown by data from the financial technology start-up OnMarket BookBuilds (OMB), which has launched the online investment access platform and app OnMarket.
OnMarket is the world’s first, free-access capital raising tool that enables eligible investors to easily access IPOs and placements conducted by ASX-listed companies.
Based on OMB’s data, companies using OnMarket to raise capital from the public through IPOs and equity placements have outperformed indices for larger companies and small-caps.
Ben Bucknell, OMB chief executive, said IPOs and equity placements had 25 percent returns from October 2013 to January 2016.
“The returns are impressive. If you had bought the ASX50 or ASX Small Ords indices at that time, you’d be underwater by 6 and 2 per cent, respectively,” Bucknell said. “Even when the outliers are removed the OnMarket portfolio still yields a 25 percent return overall.”
“Why the outperformance? Companies that have embraced technology and raised capital directly from the public are clearly doing more than one thing right: they have, as a group, significantly outperformed their peers, the market, and so-called blue-chip ‘safe bets’,” Bucknell added.
Investments in Initial Public Offerings (IPOs) on the ASX can generate more impressive equity returns than the so-called “blue chip” shares.