Australian online music retailer ChaosMusic has unveiled plans to raise AUS$15 million (US$9.9 million) through a public issue of up to 15 million shares.
Chaos is hoping for a market capitalisation of up to AUS$40.8 million (US$26.9 million), part of which will be used to continue funding the company’s marketing and partnership strategies.
“CDNow will come here with a big marketing budget, and we need to be able to match it,” said Chaos CEO Rob Appel. “If we turned the marketing budget off now we’d be profitable, but we need marketing to take America on.”
The IPO opens November 12, and will use locally developed electronic bookbuild technology that is an Australian first, and is similar to what has been used with some private investors in the United States.
The eCapital technology was developed by Australian corporate finance firm Ord Minnett and local Web developer @WWW. It allows retail investors to nominate online a share price they would be willing to pay, and how many shares they want to buy.
Investors must select a price within or above the share value determined for Chaos’ IPO, which is between AUS$1.00 (US 66 cents) and AUS$1.50 (US 99 cents). They can participate and monitor the average nominated share price of the IPO through the Chaos IPO site.
Ord Minnett will set a share price based on retail and institutional investors’ interest when the IPO closes on December 1. All retail investors who nominated a price above the decided price will receive a share allocation. They can pay for the stock by cheque or through the electronic bill payment tool BPay.
This is the second time eCapital has been used, after it was introduced in Australia with the November 4 IPO of the Health Communication Network, the country’s largest Internet-based health care information and software provider.
Ord Minnett intends to use eCapital for several more IPOs over the next few months, most of which will be for online companies. The company may also consider licensing the technology, said Ord Minnett manager Jason Barakat-Brown.
