Transcript:

Thank you and lucky last. So, I’ll start off with, firstly, we just launched our prospectus last Friday for our underwritten IPO. And, all going well, Monday week, you’ll be able to invest in our IPO. So I’ll start off with a bit of background on really positioning DomaCom in a global sort of theme. You’re all aware of the three digital disruptions on the left. But I’m going to suggest there’s another one that’s happening that you’re probably not aware of, which is occurring, which is the property crowdfunding.

I didn’t know when we set up DomaCom five years ago, that at the same time the first three American crowdfunding sites were created in the U.S. property, RealtyMogul, RealtyShares, and Fundrise. They chose a very simple legal structure to fractionalize, and they were operating within six months. But in 2012, they did $20 million worth of transactions. 2014, they did $1 billion. And 2015, the Americans and the English did about $2.5 billion, which is what they were tracking at from the research we’ve seen. So basically, it’s growing and growing rapidly. There’s now over 150 property crowdfunding platforms in the U.S. There’s just under 50 in the UK. There’s about a dozen in Australia.

And some of our shareholders say, “Well, what took you so long, Arthur?” Well, as you’ll see, we’ve created something quite special, and there’s certain things that only we can do. For example, some of you are aware, we’re doing the Kidman transaction. We’re the only one that’s got full retail licensing. So as an overview, we take property and we break it up into bite-sized chunks. And we do so using a regulatory structure called a retail managed fund. Sounds easy to create, took us several years to get the special, what’s called asset reliefs. These are exemptions from the Corporations Act, which are required for this to work. We’ve been very lucky to get one of the largest what’s called responsible entities and custodians in the country, which is Perpetual. And so what we do, we’ve got one trust, the DomaCom fund, and we create a sub-fund for every property, so it segregates it. So it’s quite unique.

Now, our target market is the self-managed superannuation market like everyone else, right? But we’ve got some sort of history there. In my previous business, Praemium, when I left there 5 years ago, we had 45,000 portfolios on the platform managing $45 billion, 18,000 of which were self-managed super funds. So we’ve already got that track record of penetrating this market. I’ve poached the whole sales force, they grew us there, they work for me at DomaCom as well. So it’s a market that we’re well-connected to. But having said that, we’ve already got interest from corporate and industry funds. Why? Because their members, like everyone else, like property. And that’s the key sort of drive behind our platform.

So, technologically, you could view us as an advanced form of property syndication. So, syndication with steroids. It’s got a technology layer that will enable people to pool together to buy anything, any property that’s available for sale in Australia. And we use the term “book build,” so people that are grouped together pool, build, buy the asset. And then, using our legal structure, we share the ownership. And our face structure as a business is very attractive. We’re a fund manager. We charge a percentage of the gross value of the assets every year, it’s 0.8% plus GST. It’s very sticky. Once we buy some properties, and, in fact, the overview is wrong, we’re now over 20 properties with another 32 transactions going on as we speak. And these aren’t including Kidman and the other big transactions.

We launched our prospectus last Friday. All going well. Our offer opens on the 11th of July, and we’ll be hopefully listing on the 18th of August. Now, where are we as a business? We’re at lift-off. We have 37 financial planning dealer groups put us on what’s called their approved product list. For those of you from a fund management background, you know how actually impressive this is. As a startup fund of a type that’s never existed before, we had 37, it’s actually now 38, dealer groups had investment committee meetings, we had to have someone championing us. They met, they’ve analyzed us, and they put us on their approved product list. This is with zero funds under management.

We’ve had 500 of the advisors, which, this is now 5% of the market, right, may I remind you, right, from a standing start, 5% and 500 of the advisors, which is 50% of the target advisors, have undertaken a special online accreditation course and test. Why is this necessary? It’s part of our conditions from ASIC on our license is to do this, because we’re not like any fund that’s ever existed before. Now, advisors are busy people, I can’t imagine they’d sit around doing online courses and test because they feel like it. So it’s another good lead indicator.

We’ve acquired, it says 16 properties, but there’s actually another 5 transactions that have gone to 100%, we’re just waiting to settle on. There’s 31 residential book builds going on. We’ve got another 4 or 5 larger $20 to $100 million commercial or development book builds. So we’re at that pivot point. And this is one of the reasons that we’re picking now to IPO, but you’ll see in particular why.

Some of you have, you know… I thought I’d mention this now because I get asked this all the time, what’s happening with Kidman? Well, what’s happening is that we’ve had just over 5,500 people pledge $80 million. We’ve been pleased to say that after the second time the overseas buyer was blocked, we’ve now been allowed into the transaction and so we’ve now moved from pledges to actual bids. And I’ve got a partner to buy the business, and that’s already funded. So we’re now trying to buy the land, the land is valued $210 million. And some of you would have seen the TV ads that just started on Foxtel and also the free-to-air stations. So we’re going to give it a good crack, it’s a long shot, but either way, it’s really helping DomaCom, A, from a visibility perspective, but, B, we’ll get some funds under management from it.

We launched that prospectus. We’re seeking to raise $10 million, at the minimum of $5. The $5 is underwritten, so we will subject to ASIC and ASIC’s approval, of course, on our list. To get to where we are, we’ve already raised $20 million. This is not an easy thing to do. We’ve got 30 staff, we’ve had to get researched, it’s a long process. But we’ve created something that’s particularly valuable because we can go retail. None of the others overseas, the 150 in the U.S., the 50 in the UK, or the others in Australia can do a Kidman because they don’t have retail authorizations. So that’s the value that we have, but also it’s taken us five years to get all these dealer group approvals and everything else. So there is value in our business. And clearly, if we achieve the $10 million, we have capacity to take some over for some shareholder sell downs as well.

Now, what are we going to use the money for? The first and main reason is that the only pushback we’re getting now, from both the people pledging for Kidman, but also the advisors, is, “Who is DomaCom? How do we know you’ll be around next year?” And it’s a really hard question to answer as a private company or as a public unlisted company. So the only answer is one of two things. Either someone else buys us who’s already got that thing, or we list. The reality is that listing is the only answer. And what it’ll do is remove the final hurdle for us to really accelerate our penetration in the financial advisor market, but also the direct-to-consumer market, as the Kidman transaction is demonstrating.

We’ve obviously going to spend some of this money on radio and TV. We’re not a bashful company, so we’ll go out there and market aggressively. We’ve got two new products coming along, corporate bond. So we fractionalize anything. We just chose property first, corporate bonds second. So a part of our financial services license, we’re a market maker. We can make our market in our instruments. So the way we’ve implemented that is instead of settling in three days, you settle immediately on our platform. And it’s live and working, and we’ve had transactions occur. We’ve also got equity release, and this is where the retirees sell a bit of their property. That’s not approved yet, but we’ve been working at having three years three years of quality time with ASIC on that one.

So, yeah, in terms of the time table, look, we’re going to market this to all of our dealer groups. They’re going to get priority access. We got a relationship with HotCopper, we’re going to market there. Wholesale Investor, of course, our friends here. We’re going to do an accelerated campaign through here. And all the direct investors who’ve approached us through Kidman, and several others. So we’re going to quite aggressively market this. What’s called the exclusion period, the exposure period finishes hopefully Friday next week and then we’ll be open for applications. And, all going well, we’ll be trading. Our first trading day will be around about the 18th of August.

So, hurdles, well, there’s a lot of hurdles. There’s legal structure being approved, there’s the fund being rated. Before planners could use us, we need our external research companies giving what’s called our investment-grade writing. That took two years. And then getting approved by these advisors. So there’s a lot of water under the bridge, and there will be competitors, but they’ve got to do all this, too. And then they also then have the benefit of our background, which is already having penetrated the SMSF in accounting and financial planning market.

There’s a lot of up-side. You’ve got to make your own number. So, what percentage penetration we’ll achieve. Whatever you work out, times it by 0.8, that’s our fee. And our cost base, basically, is the first billion will cover our expanded cost base. Above that, $0.75 in the dollar is profit. Now, clearly, we’re talking about an asset class which is bigger than equities, an asset class that people like more than equities, which is property. And what we’ll enable people to do is buy specific bits of property and diversify their property investment profile, rather than as the statistics earlier said, there’s three quarters have just one property. You never do that in equities, why are you doing it in properties? Well, because until we came along, that was the only way to invest in specific properties. So, we’ll be at the back and welcome any questions. Thank you.