All companies are likely to need access to growth capital in their formative years. Upfront lump sum placements can be less than ideal for existing shareholders who can frequently be diluted at a price that doesn’t properly reflect the emerging valuation case.

An ATM is a facility that should be established early, providing long-term (up to 4 or 5 years) access to capital.

Following establishment, a company can draw upon the ATM as and when needed, to quickly raise investment at the market price, with the timing, maximum size and minimum floor price of the capital raise remaining at the company's discretion, and without the time and preparation constraints of traditional issuance.

ATM means an “At-the-Market” issuance agreement under which an ASX-listed company may elect from time to time, at its option, to have Alpha Investment Partners invest in its shares of common stock at a market price as a means of raising capital.

Much like a debt facility, it is a long-term agreement that can be drawn upon at the discretion and on the terms of the company.

An ATM provides for investment over time, at market prices, as opposed to disruptive one-off issues via discounted placement.

With global experience in investment banking, our team understood that in many developed economies, listed companies were attracting investors on substantially better terms than was possible in Australia.

As much as 40% of secondary issuance in the US is now done via ATM facilities.

In addition, the Australian ECM landscape is littered with stories of how difficult it has been to gain traction with traditional ECM houses. Issuance programs can be slow and inflexible, and ultimately expensive in terms of the amount of work done by the company itself, the issuance discounts required, and the digestion issues post-raise.

With our more company-friendly facility, we have directly addressed this situation. It minimises capital raising impact to existing shareholders, reduces costs, and increases the flexibility of investment with the least possible market impact.

It is a straightforward facility, transparent, and by design without any of the unintended forced issuance risk that has been associated with other alternative strategies marketed in Australia.

Put simply, we formed Alpha Investment Partners to enable ASX-listed companies to attract investment on better terms.

Key Features

Flexibility

By having an ATM in place, a company can access investment at short notice and on its terms - no need for brokers, roadshows, pricing negotiation and digestion of issues from investors who only participate in placements for the discount offered - instead companies can seek investment as and when needed, or opportunistically at one day’s notice.

Reduced Disruption

ATM facilities are in place over a longer term so do not need the repeating of disruptive road shows, pricing, trading halts, and then the digestion of issues made to clients of the brokers who are not natural holders of the stock - all of that is highly disruptive and avoided with an ATM facility.

Cost of capital matters

Existing shareholders who have supported the progress of a company to date should not be subject to the cost and excessive dilution from the issuance of deeply discounted new equity – our facility provides a level playing field for all investors (both domestic and international) to invest in the company. Existing shareholders are protected at the same time as promoting new shareholders.

Funding matched to progress

Our investment can be scaled over time, matching funding requirements to the delivery of operational milestones. This has the benefit of timing new investment, being priced against progress, not one-off binary issuance.

Alignment

The AlphaIP ATM facility is aligned with existing shareholders. AlphaIP has only one counterpart (the ASX-listed company), so our interests align with that company.

A long-term solution

By adopting an alternative to regular discounted one-off issuance, and instead raising investment over time as progress and market sentiment change, the company achieves a reliable source of capital with little market impact, unlike the disruption commonly seen in discounted placements and the wasting of positive news events.

Control

The company controls key terms of the facility (including timing, the quantity of new investment, and a minimum floor price).

Key terms of the facility (including timing, the quantity of new investment, and minimum floor price) are all controlled by the company.

ATMs are especially well suited to working capital requirements:

• ATMs raise investment over time allowing you to “top up” working capital without the disruptions of a capital issue

• ATMs raise investment at market prices and can be adjusted easily up or down in size by varying tranche sizes, depending on market conditions and varying working capital requirements

• ATMs avoid placement disruption. In most instances the discount required to clear a placement result in the entire company trading down toward the issue price after placement and thus only a small potential working capital raise can reprice the entire company at a significant cost to existing shareholders – ATMs avoid this situation.

The benefits of an ATM facility include:

• Materially reduced impact on share price and management time / A low-touch, quick-to-market option for raising investment

• Issue over time as a story is de-risked, avoiding lump sum, upfront issues

• Simple and transparent fee structure that is usually materially less expensive than alternatives

• Flexibility to act quickly as opportune or as needed, without the need for roadshows, trading halts and dealing with brokers and their syndicates of buyers seeking discounted issues

• Control - company always controls when ATM’s are active, over what size and with what floor price.

AlphaIP seeks to change the mindset of accepting the high cost (discount, fee, and options) and highly disruptive cycle of discounted placements. Our ATM facility allows flexible issuance investment in the background, over time, at market prices, to deliver the same outcome in terms of capital raised but with a much materially lower impact on management and, shareholders, and cost of capital.

AlphaIP’s more direct approach can optimise pricing by removing layers of process, cost and inefficiency.

Lower Impact

Issuance with no roadshows, no negative last-minute pricing negotiations nor issue placement digestion.

By avoiding the need for one-off, upfront pricing of placements that almost always includes a material discount to attract new clients of the broking firm to take the placement (in many instances attracted solely to the issue discount, not the fundamental company investment case).

The avoidance of the flipping of discounted placement stock over which the company, or the Broker for that matter, has no effective control.

Cost of Capital matters

By pricing at market, you avoid the inherent conflict in a traditional broker-driven model of the discount required by one set of the Brokers clients to participate in issues. This effectively is a significant additional cost funded by the corporate and its existing shareholders.

ATMs do not need to replace traditional capital-raising methods such as debt, hybrids, private placements, rights issues, SPPs, or DRPs. ATMs supplement these traditional methods, ensuring the most efficient and cheapest cost of capital is available at any point in time. We want ASX companies to consider AlphaIP’s ATM as part of its capital management strategy, to provide flexibility and optimal alternatives for the company and its shareholders.

ATMs can also be used opportunistically and in volatile markets

A company can now capitalise on attractive market conditions, facilitating investment when prices are favourable, not just when the company requires immediate funding and the market is aware of that fact.

ATMs are often instantly utilised when share prices are elevated, during periods of high liquidity and when market sentiment is strong. Traditional methods for accessing capital are often too slow to take advantage of these opportunities. Traditional methods also tend to be much harder to access during times of volatility, while ATM’s benefit from the liquidity that is usually correlated with volatility.

Better outcome for existing shareholders

Our facility invests over time and ensures that pricing captures the operational progress, news and milestones so issuance is better matched to operational performance.

Can be activated at any time and under terms that are at the company’s discretion.

By being able to set the terms under which investment is obtained, investment only happens when the company agrees to pricing.

Short time periods to establish and utilise.

By avoiding the need to involve traditional brokerage houses, the path to market can be quicker and more efficient – and demand far less management time.

ATMs do not require roadshows, broker presentations or other time-consuming activities.

Simple and transparent fee structure.

The costs associated with an ATM are typically materially lower and more transparent when compared to traditional capital-raising methods.

The facility can run alongside existing capital-raising activities or replace them entirely – providing long-term investment access instead of disruptive one-off issuance cycles.