Virgin offers frequent flyer points for startup investment with OnMarket

Members of the Virgin Velocity loyalty program will be able to earn points for investing in IPOs, thanks to a new partnership with fintech startup OnMarket.
Written by Tas Bindi, Contributor

OnMarket BookBuilds and Virgin Australia have teamed up to launch an "invest and fly" program that will allow investors to earn Velocity points on investments they make in initial public offerings (IPOs).

Velocity members will earn 1 point for every AU$4 spent via OnMarket -- which claims to open up the IPO market to all investors, not just clients of investment banks that are part of the IPO underwriting syndicate -- with no cap on the number of points they can earn.

"We are opening up the IPO market to the public so that they can take advantage of this high performing 'asset class'," said Ben Bucknell, CEO of OnMarket BookBuilds. "There are no favourites or preferred investors -- mum and dad, institutional, SMSF, first-time -- all OnMarket investors are treated equally. If an IPO is oversubscribed, everybody is scaled back by the same proportion."

The partnership allows OnMarket to tap into Virgin Velocity's members who might already be investors and incentivise non-investors to look into investing in IPOs.

Prime Minister Malcolm Turnbull launched OnMarket in October 2015 as part of his innovation agenda.

In the first 12 months of its launch, Bucknell said OnMarket has provided Australians access to 29 IPOs -- about 1 in 3 of all IPOs in Australia in the corresponding period.

More than a third of IPOs on the ASX in the first half of 2016 have come from the information technology sector, according to OnMarket BookBuilds. More than 100 technology companies have debuted on the ASX in the past two years.

Towards the end of October, GetSwift Ltd, the holding company that owns Australian-founded logistics management startup GetSwift, had opened up its IPO with a goal to raise AU$5 million.

Kogan launched an IPO of AU$50 million in mid-June, though the public were shunned in the offer. Instead, the company had an institutional offer, broker firm offer, priority offer, and an employee offer.

Reverse takeovers, particularly of resources companies, have been a popular way for companies to list on the ASX.

For instance, the reverse takeover of Lithex Resources by Israeli lithium ion battery developer UltraCharge is underway, with the Perth based mining entity closing its AU$3.5 million IPO on October 25 and expecting to be reinstated on the ASX by the end of November.

In September, Singaporean cloud-based backup platform Dropsuite issued a prospectus to raise AU$8 million to complete the reverse takeover of Perth-based Excalibur Mining Limited.

At the start of the year, Canadian data security firm Zyber Secure Mobile Solutions hit the ASX with a AU$3 million backdoor listing.

A week later, technology and entertainment company MSM commenced trading on the ASX after successfully raising AU$7 million as part of a reverse takeover of Minerals Corporation.

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