Social network for ‘like-minded investors’ announces $7.5m initial public offering

By Lucy Dean

October 10 2017
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An online trading platform which pitches itself as a “dynamic, always-on social investment network of like-minded investors” has announced a $7.5 million initial public offering.

SelfWealth, a flat-rate online brokerage service has launched an initial public offering of $7.5 million. With the offer open until 25 October, SelfWealth is looking to raise 37.5 million shares at $0.20 apiece.

The platform doubles as an “online community for investors” where investors can track the portfolio performance of other clients on a depersonalised basis, similar to a social network.

At the same time, investors can trade on the platform and are charged a flat rate of $9.50 per parcel of shares traded. However, according to the company, investors are “trading knowledge, not just shares”.

With research powered by Reuters, and Chi-X and the ASX fuelling the platform’s “live” pricing of securities, SelfWealth considers itself “potentially disruptive”.

“SelfWealth is focused on Australia’s growing network of self-directed investors and aims to grow its market share and revenue by: Accelerating marketing activities to target potential new clients from those Australians intent on conducting independent trading in the next two years or who are keen to start investing, but who aren’t currently trading,” the company explained.

Further, SelfWealth wants to target intermediaries like independent financial advisers and seeks to promote growth by: “Continuing to develop business enhancements, new products and services not currently available for SelfWealth online clients. At the present time, SelfWealth is of the view that margin lending and exchange-traded products could be of interest in the future to SelfWealth clients.”

Its other main growth strategy is to tap into the Australian SMSF market. SelfWealth has entered into a seven-year distribution agreement with BGL Corporate Solutions, an Australian SMSF software provider.

SMSF research

In a survey conducted of SelfWealth users in the first six months of 2017, SelfWealth noted that it “is clearly difficult” to predict the investment trends perpetuated by SMSFs.

However, given that in 2016 SelfWealth observed SMSFs taking on more risks and investing in small-cap funds, with rising interest rates in 2017 “we may very well start to see a shift away from some of those riskier investments and into safer options”.

Additionally, SelfWealth observed waning interest in property and predicted that interest will “continue to remain subdued”.

“Only a few months ago the Reserve Bank signalled it would start pushing into an environment of higher interest rates and raise credit reserve requirements for financial businesses. Given the vast majority of Australia’s mortgages are variable rate loans, any fluctuation in interest rates would hit a significant amount of the population, including anyone who recently purchased property at the top of the market.”

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