DomaCom IPO: Property Crowdfunding for SMSF Investors
Targeting the SMSF industry, DomaCom offers retail investors access to the property focused DomaCom Fund via an online crowdfunding investment platform.
DomaCom aims to disrupt the superannuation and investment management industry and seeks to raise up to $23.6 million via an initial public offering ('IPO') to list on the ASX in August.
Australia’s Self-Managed Superannuation Fund (‘SMSF’) industry continues to grow, and we are noticing an increasing appetite amongst investors to take responsibility of their own retirement savings. Technology and the internet facilitate financial transactions and allow SMSFs to choose from a variety of products. DomaCom Limited aims to disrupt the SMSF industry by combining two concepts: Crowdfunding and property investing.
Targeting the SMSF industry, DomaCom offers retail investors access to the property focused DomaCom Fund via an online crowdfunding investment platform. As at March 2016, the DomaCom Fund comprised of 16 sub-funds with Funds Under Management (‘FUM’) totalling $12.4 million.
DomaCom has a first mover advantage providing retail investors access to direct fractional domestic property as there is no comparable product on the market. The distribution base is already growing with the company securing access to 5% of domestic Independent Financial Advisors, and present crowdfunding initiatives such as the Kidman Cattle Station tender could lift FUM in the near future. It is also worth noting that management has a track record of building FUM in the financial services industry.
However, in order to reach a breakeven position, the company is required to grow FUM to $600-$700 million and there is no assurance that this can be achieved. The valuation of $93.6 million incorporates a significant degree of FUM growth and as revenue is linked to FUM, the company is reliant on external capital for the foreseeable future. Furthermore, a high degree of unallocated free float (over 50 per cent) could impact post listing performance.
The DomaCom listing could attract retail investors based on the "emotion" of keeping Australian property in local hands and completion of present crowdfunding projects could increase the size of the fund significantly. However, taking into account all catalysts and hurdles, IPO investors should be aware that this listing is speculative in nature.
Company: DomaCom Limited
ASX Code: DCL
Shares on Offer: 31.6m
Listing Price: $0.75
Market Capitalisation: $93.6m
Listing Date: August 31
Author: Simon Herrmann
Aug 10, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.