Australian Resources & Investment chats to Blu Horseshoe about the new digital capital-raising platform taking the equity market by storm.
Blu Horseshoe labels itself as “a new, fast and fair way to invest in companies raising funds”.
The digital platform enables investors to see more deals faster, putting them at the front of the queue for a wider range of ASX capital raises.
Blu Horseshoe chief executive officer Antony Tolfts said it is currently difficult for investors to be across all offers available in the equity market.
“The bulk of the opportunity in the Australian equity market is only available to a very small number of folks because it’s fragmented across nearly 200 brokers,” he told Australian Resources & Investment.
“All the compliance and regulation – which is not a bad thing – means opening accounts these days takes a long time and maintaining them is a hassle. Very few people can have enough resources to open 200 broker accounts.
“What you tend to find is most investors are unable to access the opportunities they want to access. In that situation, there’s investors losing out, companies losing out, brokers losing out.”
This is where Blu Horseshoe enters the equation.
“What Blu Horseshoe does is aggregate all of the opportunities from brokers and gives the investors access to those transactions through only opening one account,” Tolfts said. “We don’t offer trading or research. We’re just a giant billboard.”
Since the platform’s soft launch in May 2022, Tolfts said Blu Horseshoe had hoped to support 50–60 transactions in its first year. As of mid-November, the company had already supported 167 deals.
“The response from the market has been much greater than our expectations,” he said. “In addition, we hoped to get an allocation rate of between 30 and 35 per cent. Our allocation rates are averaging 64 per cent to date across every deal.”
This means that more money is reaching the right transaction, supporting investors, companies and brokers. Blu Horseshoe ensures that everyone gets a fair go.
Tolfts said while the platform has supported IPOs (initial public offerings) and pre-IPOs, it is primarily focused on post-IPO raisings.
Often post-IPO offers are only open for a few hours, meaning investors must be incredibly organised if they want to participate, or they can tap into Blu Horseshoe.
“The reason the platform is particularly important is the average post-IPO offer – the bread and butter of our business – is only open a couple of hours, so the investment window is really tight,” Tolfts said. “It’s not unusual that we see one hour to 90 minutes being available.
“So the offers on the platform, it’s distributed to our investor base, who are only those folks who are pre-verified 708 professionals or people who are allowed to invest. And it’s a quick process.”
While it has been initially focused on the Australian market, Blu Horseshoe is casting its net wider in 2023, with international markets on the radar.
“When we launched in May, we were really focused on the Aussie market getting the Australian investors in and we continue to do so,” Tolfts said.
“That said we are now casting our net wider to broaden our investor base. In particular in Singapore, (which has a) very convenient time difference and the German markets where there’s about 700 Aussie companies that are dual quoted on the Frankfurt open market.
“A lot of the German brokers are very familiar with the ASX space and we’re trying to give them access through the Blu Horseshoe platform.”
For a company looking to conduct a capital raise, Blu Horseshoe would typically engage with a lead manager.
“We tend to add to an existing lead manager’s distribution,” Tolfts said.
“We want everybody to win, and we want to add to the Aussie market. We don’t see ourselves as a competition to anybody, but we bring everyone together.
“We come into our own when a transaction is not as easy to access. If a company’s listed and it’s only available to professional investors or 708 (sophisticated) investors, that’s more our sweet spot.”
Post-IPO offers are only available to a subset of private investors that qualify as sophisticated or professional investors. Sophisticated or 708 investors must prove they’ve earned at least $250,000 in pre-tax income in each of the prior two years or have net assets of $2.5 million, including property.
“According to the Australian Financial Review, there’s about 3.2 million folks who qualify as a 708 investor in Australia,” Tolfts said. “All those folks have benefited from the property market and a lot of them won’t realise they are eligible for these incredible investment opportunities.”
Blu Horseshoe is backed by a team with extensive financial services experience, who are there to support anyone who engages with or enquires about the digital platform, whether it be ASX companies, investors, brokers or anyone in-between.
When asked if other capabilities would be incorporated into Blu Horseshoe, such as research or analysis, Tolfts reiterated that, for now, the platform prioritises service first and foremost.
“Our place in the market is very much just bringing together a book of clients with the right transaction,” he said. “We really want to add to the industry without causing any negative impact.
“Our core business is not research … We don’t give advice which is a critical point. We simply make the offer available and our investors, we imagine, would be given their own advice.”
A digital platform where all capital raises are in the one place. Sounds like Blu Horseshoe is an investor’s dream.
This feature appeared in the February–March issue of Australian Resources & Investment.