“It’s a perfect storm,” Green said. “Companies can now raise significant capital privately without the costs, delays and scrutiny that come with a public listing, and in some cases, ASX rules are simply less founder-friendly than those in other major markets like the prohibition against dual‑class shares, making the ASX less attractive to founder‑led growth firms.”

In the past, the ASX was a natural destination for early-stage companies in sectors like mining, tech and biotech. The model was straightforward with the mining companies listing early to fund exploration, while tech firms could spin out promising intellectual property into a listed vehicle to raise research and development capital. This process not only brought investors into high-growth ventures early but also made the ASX a recognised hub for speculative and growth-oriented plays.

However, over time, Green noted, the ASX increased its scrutiny and toughened its criteria for admission. “This has been a slow tightening of the screws,” he said. “The smaller end of the market, mainly companies under $100 million market cap, has been hit the hardest. These are the firms that once relied on public markets for early growth funding. Now, they’re increasingly turning to private investor capital instead.”

The numbers underscore the trend. In 2024, total IPO proceeds were just $2 billion, with a staggering $1.3 billion coming from a single listing. “When one company accounts for almost two-thirds of total IPO capital raised, you know the market has lost breadth,” Green said.

Faced with shrinking volumes, the ASX has rolled out some changes to its Listing Rules effective 30 May 2025, marking the first significant update since 2019. These revisions codify some long-standing practices, clarify the expectations for early-stage applicants and aim to streamline the listing process.

One of the more high-profile proposals is to cut the time between prospectus lodgement and listing from six weeks to just two which would allow earlier participation by investors.

On paper, the reform promises faster access to market but Green said two key restrictions limit its reach. “First, it only applies to companies with an expected market cap above $100 million. Second, it excludes any company with ASX-imposed escrow. These two conditions will exclude most early-stage mining and tech companies,” he noted. “Ironically, these are exactly the companies that would benefit most from a faster, less costly listing process.”

Another potentially transformative change under consideration is allowing dual-class share structures, aligning the ASX with exchanges in London, New York and Hong Kong. Under this model, different classes of shares carry different voting rights, often granting founders enhanced control while limiting public shareholders’ influence.

Proponents argue that this keeps visionary founders focused on long-term goals without the threat of hostile takeovers or short-term market pressures. Critics counter that it entrenches control, undermines governance and risks sidelining minority investors.

“The concept is controversial,” Green said. “While some listing candidates view dual‑class as a competitive differentiator, investors warn that it cements control in the hands of a few insiders, weakens accountability and elevates the risk of founder entrenchment.

“Proponents argue that dual-class shares allow visionary founders and charismatic leaders to pursue long-term objectives without succumbing to short-term market pressures.  Past scandals involving strong outspoken founders both in Australia and overseas have heightened scepticism of this argument.”

Investor advocacy groups emphasise that Australia previously abandoned dual‑class shares. They urge that any re‑introduction must come with robust oversight, mandatory sunset clauses or voting thresholds and clear disclosure to protect non‑founder shareholders.

The US experience is interesting. Alphabet Inc., the parent company of Google, operates under a three-class share structure. Meta Platforms (formerly Facebook) has a dual-class share structure granting CEO Mark Zuckerberg outsized voting power. News Corp also operates under a dual-class share structure that gives the Murdoch family significant control over the company. Berkshire Hathaway, led by Warren Buffett, utilises a two-class share system with Class A shares possessing much greater voting power than Class B shares. By contrast, Tesla and Amazon do not have a dual-class share structures. Tesla and Amazon both have a single-class share structure, meaning each share carries equal voting rights

For Green, the path forward is clear. “The ASX must introduce flexible, targeted reforms that recognise the realities of Australia’s issuer base.”

He suggests several measures, including:

• Tiered governance models that allow small-cap companies to list with scaled-down reporting obligations, particularly for remuneration and compliance.
• Conditional or transitional dual-class structures with strict safeguards, such as automatic expiry after a set period or mandatory investor approval for key decisions.
• Scaled free float and capital raising thresholds so smaller issuers can meet reduced initial requirements but build up over time.
• Extending streamlined listing processes to companies under $100 million market cap and removing the restriction linked to escrow obligations.

“The ASX needs to make listing in Australia an attractive proposition again, not just for billion-dollar companies but for the smaller growth firms that are the lifeblood of a dynamic listed market,” Green said. “If the goal is to encourage more listings, the rules must work for the companies that actually want to list here otherwise, they’ll simply list overseas or stay private.”

“Without bold reforms that balance governance with flexibility, the ASX risks ceding more of Australia’s growth story to private markets and offshore exchanges.”

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The exuberance of recent years has given way to hard-nosed realism. Early and mid-stage technology companies, in particular, have seen a material compression in valuations. With a stronger focus on interest rate volatility and capital scarcer, gone are the days of mega-rounds and sky-high burn rates.

“The interest rate volatility has forced a recalibration. Founders are raising smaller rounds, with stricter terms and more focus on profitability,” he said. “Venture firms have dry powder, but they’re deploying it slowly, with heightened scrutiny on business models and a sharper eye on governance.”

With IPO markets sluggish and M&A activity at a low point, investors are turning to secondary trading platforms to unlock liquidity. Structured platforms like PrimaryMarkets are gaining traction, offering compliant and transparent ways to buy and sell stakes in unlisted securities.

“We’re seeing unprecedented interest in the secondary space,” said Green. “Investors want liquidity, and issuers are recognising the need for better transparency and engagement, even if they aren’t listed on a public exchange.”

Looking ahead, the outlook for private markets is best described as one of cautious optimism. Interest rates may have peaked, but central banks are unlikely to rush into cuts. The cost of capital will stay elevated, forcing businesses to prove capital efficiency and pursue sustainable growth.

Equity investors will lean toward companies that can thrive without repeated capital injections, while debt transactions such as leveraged buyouts face stricter covenant demands and higher hurdle rates.

Fundraising, too, will remain selective. Experienced mid-market managers with clear sector specialisation and exit track records are likely to find support, while emerging strategies may struggle to secure commitments.

“Alignment of interests, fee discipline, and deep sector knowledge are more critical than ever,” Green noted. “Institutional investors are being extremely selective. It’s not about spray-and-pray anymore but about precision targeting.”

ASIC’s scrutiny of private offerings is intensifying, and the debate over sophisticated investor eligibility is far from over. Advertising practices, disclosures and transparency will all come under sharper focus. Meanwhile, proposed changes to unrealised capital gains tax is sending waves across the private capital landscape, especially for long-hold assets.

Despite the uncertainty, several sectors continue to attract robust investor interest. Energy transition, clean tech, and grid modernisation are high on investment radars. Digital infrastructure including data centres, fibre, and cybersecurity remains resilient as demand for bandwidth and security intensifies. Healthcare, aged care and biotech are also emerging as structural winners, driven by demographic pressures and rising health system demand.

“Private markets are proving resilient by adapting,” Green concluded. “We’re seeing more structure, more discipline and a clearer path to long-term value creation. This is a pivotal moment and those who embrace the new rules of the game are going to lead the next cycle.”

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Jamie Green, Executive Chairman of PrimaryMarkets, notes that the growing dominance of large superannuation funds, private equity firms, institutions and family offices in private markets, combined with a marked decline in new public listings and continued de-listings, has significantly reshaped the private capital market.

“In an increasingly concentrated superannuation sector, the sheer dollar value of funds deployed into private markets can fundamentally influence the broader Australian capital markets,” Green says. “ASIC has flagged concerns around leverage, valuation opacity and the impact on unit pricing-particularly when retail investors, via their superannuation funds, are exposed to these transactions.”

ASIC’s concerns over valuation transparency and processes have prompted calls for regulatory refinements, especially where potential conflicts of interest arise. The regulator is wary of scenarios where fee structures and management remuneration might incentivise inflated asset valuations. Financial intermediaries conducting valuations could also face heightened scrutiny, given the implications of periodic mark-to-market practices.

“At PrimaryMarkets, we welcome a well-regulated, well-structured private market ecosystem. Compliance and proper processes are not a burden- rather they present an opportunity to attract institutional capital and drive sustainable growth in the private market sector.”

Green adds that private market investments, while attractive, are not without risk. “Private investments share many characteristics with publicly listed companies, but they also carry unique risks- particularly around liquidity, pricing discovery and regulatory oversight,” he says.

The regulator has also turned its attention to the relationship between public and private markets, as it seeks to understand the sharp decline in IPOs. Compared to a thriving secondary capital-raising environment in public markets, fewer companies are opting for new listings, partly due to the availability of deep pools of private capital. Private equity firms and international investors have increased their participation in private transactions, further reducing the number of new public listings.

Traditionally, the ASX served as a launchpad for small-cap resource and niche technology companies. However, Green suggests that regulatory hurdles, compliance costs, and an increasingly difficult listing environment for microcaps have contributed to the decline in IPOs.

“The key reasons for a company to go public are capital raising and liquidity,” he notes. “But many micro-cap companies find themselves in a liquidity trap- trading with large bid-ask spreads and valuations at fractions of a cent. In these cases, raising capital becomes prohibitively dilutive for existing shareholders.”

Data underscores these challenges: out of approximately 2,230 listed companies, 275 trade at less than one cent per share, while 467 trade between one and five cents. Furthermore, 253 companies have a market cap below A$5 million, and 269 fall between A$5 million and A$10 million.

“Given these realities, voluntary de-listings of microcaps are unsurprising,” he notes.

“With the rise of secondary share trading, the need for market integrity, governance, security and transparency is more critical than ever,” Green says. “Platforms like PrimaryMarkets, which operate with robust compliance frameworks, will continue to play a crucial role in ensuring fair and secure private share transactions.”

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[1] Source: https://asic.gov.au/regulatory-resources/find-a-document/reports/dp-australia-s-evolving-capital-markets-a-discussion-paper-on-the-dynamics-between-public-and-private-markets/

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AusCann Group Holdings (AC8) and several others were delisted in August 2024 after failing to pay their ASX listing fees​. Splitit Payments (SPT) delisted in July 2024, BWX Limited (BWX) entered voluntary administration in April 2023 due to financial distress, leading to its removal from the ASX. Similarly, Byron Energy (BYE) voluntarily delisted in May 2024 as part of a strategic shift.

“Companies list on the stock exchange primarily to raise capital and provide liquidity for their shareholders. For larger companies, these goals are often met continuously, making staying listed a logical decision,” said Jamie Green, Executive Chairman of PrimaryMarkets.

“However, for smaller companies, the reality is often different. Capital can remain elusive even while listed and shares can become highly illiquid, trading sporadically. Faced with these challenges, many smaller firms conclude that the costs and compliance obligations of remaining listed are not an effective use of shareholders’ funds.”

Listed companies are required to meet strict reporting and governance standards, including detailed financial disclosures, regular shareholder updates and adherence to corporate governance frameworks. According to Green, delisting allows companies to reallocate financial and management resources toward core business operations, preserving cash and enhancing long-term value.

“Delisting also enhances a company’s operational flexibility. Publicly listed firms face intense scrutiny from investors and analysts, creating pressure to deliver short-term results, typically reflected in quarterly earnings. This focus can sometimes undermine long-term strategic plans. By exiting the public market, companies can pursue long-term objectives without the distraction of market sentiment or the obligation to satisfy a broad range of stakeholders,” he added.

Green also highlighted that delisting can facilitate strategic restructuring or repositioning. As a private entity, a company gains greater freedom to pursue mergers, acquisitions and other corporate actions without the immediate pressure for earnings growth. Additionally, private companies have more flexibility to explore alternative financing arrangements that may be restricted under public market regulations.

“Delisting can also serve as a defensive strategy against hostile takeovers, particularly for companies with undervalued stock. By removing shares from the public market, firms reduce their vulnerability to unsolicited bids and maintain greater control over ownership,” Green said.

He said that public companies are subject to daily price fluctuations driven by external factors such as investor sentiment, economic conditions and geopolitical risks, which may not always reflect the business’s true fundamentals. “By delisting, a company can insulate itself from these market-driven dynamics, reducing valuation volatility and creating a more stable environment for long-term planning,” he noted.

Delisting is particularly beneficial for companies in sectors requiring long-term capital investments or significant research and development. In such industries, management can focus on long-term projects without the pressure to deliver immediate returns, allowing for more strategic capital allocation and investment in critical growth areas.

“With the growing availability of private capital, unlisted companies now have more diverse options to raise funds compared to the public markets. These include family offices, private equity, sophisticated investors and strategic partners,” Green said.

However, Green cautioned that delisting also comes with potential trade-offs, such as the loss of access to public capital markets and decreased liquidity for shareholders.

“Companies must carefully weigh the strategic advantages of delisting—such as greater flexibility and control—against the potential disadvantages before making this decision,” he noted.

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PrimaryMarkets, an independent platform for unlisted companies, has called for a “balanced” approach to the categorisation of investors within the framework of the Corporations Act 2001.

Jamie Green, Executive Chairman of PrimaryMarkets, says now is the time for the government and the industry to acknowledge the evolving nature of investor capabilities.

“The traditional binary classification between sophisticated and retail investors may no longer suffice in an environment where access to information and financial literacy are at an all-time high,” Green says.

“The assumption that wealth directly correlates with investment acumen is increasingly questionable.”

Under current Australian law, sophisticated investors are defined by certain net asset or income thresholds, granting them access to investment opportunities not available to retail investors. This distinction aims to protect less experienced investors from high-risk ventures, yet it inadvertently restricts access based on financial status rather than knowledge or experience.

Green argues that this delineation overlooks the reality of today’s investment world, where individuals, regardless of their net worth, have unprecedented access to financial information and tools that enable informed decision-making.

“The internet has democratised financial knowledge, allowing savvy investors to be successful across all walks of life, age and wealth accumulation,” says Green

The debate surrounding the sophisticated investor definition also touches on broader societal and regulatory issues, including the accessibility of capital and the protection of investors.

Green points out the irony in current regulations.

He says “It’s paradoxical that individuals can freely gamble their savings away but are barred from investing in potentially lucrative investment opportunities like startups. We must find a balance that encourages informed investing without unnecessarily narrowing the pool of available capital.”

“We are advocating for a reassessment of the criteria used to classify sophisticated investors, suggesting that a more flexible and inclusive approach could benefit Australia’s capital markets and the broader economy.

“The government should consider not just financial thresholds for investor classification but also factors such as educational background, professional experience, and investment track record,” Green says.

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