Bassat Slates ASX Start-Ups
Seek co-founder Paul Bassat has called on the Australian Securities Exchange to adopt much tighter listing requirements for technology start-ups. His call comes after a plethora of IPOs by small or little-known outfits seeking millions from a sharemarket float – much easier, it’s said, in Australia than on other international sharemarkets.
Bassat, who also leads venture fund Square Peg Capital, told The Australian many of the businesses seeking to float on the ASX are short on management experience, and have little capacity to forecast revenue.
Bassatt didn’t name the businesses but said: “By any measure, some of the valuations for these companies are egregious.”
He added: “I definitely think it’s incumbent on the ASX to take a much tougher line with their listing rules, like the Nasdaq exchange (in the US), because the risk is that the whole (tech) sector will be harmed.”
While the entrepreneurs and some advisers would “make a killing”, it would be a zero sum game because many of the businesses were likely to fail, creating significant losses for retail investors.
He said the main concern was a select group of 20-30 listed technology stocks, many of which Bassat said were “too immature” to have gone public, adding: “This is really only a problem in the Australian and New Zealand markets. Australia, in particular, has a culture of resources companies going to the market very early.”