ONLINE GRAPHIC DESIGN BUSINESS RETURNS 'HOME' AHEAD OF ASX LISTING
Written on the 25 October 2017 by Ben Hall
ONE of the world's largest online graphic design marketplaces, 99designs, is set to move its global headquarters back to its hometown Melbourne ahead of a planned IPO on the Australian Stock Exchange (ASX).
"The big question is 'why the ASX?'. The ASX is a closer, more addressable opportunity for us. To be put on the NASDAQ, well you you wouldn't want to list on the NASDAQ at anything under a billion dollar market cap."
Whereas on the ASX you've seen a lot of businesses use the ASX very successfully, where they've gone out at the $300 million to $500 million market cap, use that momentum, use their position on a public market and make acquisitions and grow and grow effectively, well over that billion dollar market cap and start to initiate quality coverage and get true institutional support, etcetera. I think for us, that paradigm just feels closer. So, it makes sense.
"I think there's a lot of acquisition opportunities in the market. I think we'll not only see consolidation of like-businesses, but we'll also see an opportunity to look at other parts of the creative suite. Areas outside of our core design focus."
To be a business of our size, relatively small, we haven't raised a lot of primary capital over our time. You need to be pretty focused. You have to apply a laser-focus to what you're doing. If we were to go to an IPO, an IPO would allow us to extend our reach and start to apply our businesses that have been focused on other segments. Video is a good example, of an area that could be of interest and one where there is increasing demand. That's an example. We might find other triggers that we may be able to use capital for, like one of these new market opportunities accelerates and we've got a clear acquisition strategy that requires up-front investment and that'd be another sort of thing we'd look to fund.
"One of the truisms of the agency world is that there's always been big booms and busts. Big client comes in, it's all hands on deck, lots of work on. Lose the client, 'oh dear, what are we doing next?'."
I think our model, agencies who are affected easier, realise that we either are a great augment for their internal resources, others just incorporate it full-time into their resources.
Business News Australia
Author: Ben Hall