Far East Capital Newsletter
Now ASIC is picking on mining IPOs
8 Dec 2019

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Now ASIC is picking on mining IPOs

It is coincidental that a week after I comment that transparency of pricing in small mining IPOs is a problem, ASIC fires off a warning about conflicts of interest in the same. It warns of “illegal behaviours and actions that could harm investors”, and “grubby activity by lead managers” with conflicts of interest.

I’m not sure what ASIC is on about. It seems to be taking a very academic approach that shows a lack of understanding of what a small mining IPO really is.

As I said last week, an IPO is an expensive and difficult exercise given the amount of compliance work that needs to be undertaken, for the amount that is raised. It is a high risk endeavour, for everyone, and that is even before the company achieves a listing and starts exploration.

It is difficult to know where ASIC is going with this one. Has it found the occasional IPO that it doesn’t like, and so it is going to make it even tougher in terms of compliance, for every IPO? It is bad policy to be making laws based on minority behaviour as it penalises even those behaving well. Will more rules make it even harder, such that an IPO is effectively closed off as a commercially feasible exercise for juniors? 

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