Australia is experiencing a record-shattering boom in technology listings as start-ups starved of venture capital funding pursue backdoor listings, a trend that has regulators concerned companies are trying to take short cuts to get to market.
The value of technology IPOs on the Australian Securities Exchange so far this year has hit US$1.5 billion, according to Dealogic, easily surpassing the previous annual record of US$894 million at the height of the dotcom bubble in 1999.
[Related: Five Aussie tech firms looking to shake up the ASX]
The boom has caught the eye of officials who are increasingly concerned about the quality of some of the new listings, particularly reverse takeovers, in a market that has attracted companies from as far away as the United States.
"In a number of cases, audited financial statements or business valuations for the incoming companies have not been prepared or disclosed and there has been insufficient disclosure of the incoming companies' business models," an Australian Securities and Investments Commission spokeswoman told Reuters in an email.
ASIC has forced these companies to file additional documents and "at times ASIC has issued interim stop orders on prospectuses", she added.
The major tech listings in 2014, a record year for Australian IPOs generally, included data security firm Covata, which raised $15 million through the biggest ever backdoor listing, via a failed uranium explorer.
Reverse or backdoor listings via shell companies are favoured by some businesses as the disclosure requirements are seen as cheaper and less stringent than direct listings.
Another example of the trend is Cirrus Networks, an "elite" Juniper partner that CRN reported in October as having started due diligence on a possible backdoor listing with Liberty Resources,
Notably, two weeks ago Cirrus appointed industry veteran Andrew Milner as chairperson. Milner was the man who nixed a float of cloud platform provider CloudCentral after assessing the books and deciding the company was not ready to be publicly listed.
Other tech companies to list included derivatives exchange platform OzForex Group, digital network Vocus Communications, cafe loyalty program Rewardle Holdings and trading and payment platform BPS Technology.
Two of the year's biggest are expected this month: construction software firm Aconex - which plans to raise $120 million - and outdoor clothes online retailer SurfStitch, which hopes to raise A$93 million.
A big test of the market's strength is likely early next year when banking sources expect Melbourne-based accounting software firm MYOB to launch an IPO valuing the company at around $3 billion.
Industry executives say there is appetite for more, noting a lack of venture capital for tech companies between about $2 million - where seed money is readily available - and $5 million, where doors open to big investors.
Matt Barrie, CEO of jobs portal Freelancer, whose shares surged 400 percent on its debut a year ago after an IPO which raised $15 million, said start-ups were copying the strategy of speculative mining minnows by tapping the market for funds for further expansion.
"Projecting forward, I think that the ASX will be the primary way in which technology companies raise equity in this country in the future," Barrie said.
Foreign listings
And it's not just Australian companies.
San Francisco-based online recruiter 1-page raised eyebrows in Silicon Valley when it became the first US start-up to list on the ASX in October, a decision it described as logical, ahead of a planned expansion in south-east Asia.
Attractions for foreign companies in Australia include relatively low listing costs and less stringent accounting requirements compared with the United States.
But some major industry players are unconvinced, arguing the Australian market is still not mature enough to provide the best valuations.
World-leading software firm Atlassian, for example, shifted its headquarters from Sydney to London in February to boost its chances of a successful listing overseas, most likely on the Nasdaq.
"We are a long-term thinking company... we wanted to make the best move for the next 10 or 20 years," Atlassian co-founder Scott Cannon-Brookes said.
Aconex CEO Leigh Jasper, however, said the company, which derives around half its revenue from outside Australia and New Zealand, had no second thoughts about its plan to raise $120 million in a direct listing in Australia on 9 December.
"We were able to speak to the same investors we would have if we were going for a Nasdaq listing or a NYSE listing," he said.
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