Potentially hidden gem, page-301

AFR mention on the 28th of Dec

Automated debtor management business IODM is undertaking a $3 million backdoor listing through the shell of mining company Paradigm Metals, capping off a record-breaking year for reverse listings.
IODM is the latest in a long list of more than 50 companies which have taken this route onto the ASX in 2015, compared to 31 in 2014.
Experts have tipped the momentum to only slow slightly in 2016, despite the ASX removing companies which have been inactive for more than three years.
PwC deals partner Robert Silverwood said the ASX's move to remove companies which had been dormant for three years was an attempt to curb the number of backdoor listings, but that it would still remain a viable option.

"A lot of businesses have made a name for themselves from farming the shell companies and matching them up to start-ups... but I expect to see a bit of a slow down," he said.
Managing director of IODM, Damian Arena, said it was the right time for the business to list because of the appetite for fintech and cloud companies.
"They're the flavour of the month," he said.
"We've been going for about four years now and fintech and cloud products are the way the future is heading."


IODM currently has about 30 clients, including one of the big banks and other multinationals, and provides cloud-based accounts receivable monitoring and collection management tools.
Mr Arena said the RTO would give the company the funds to expand onshore and offshore.
"We're not operational overseas at the moment, but it's an international platform and we're hoping to launch in the UK and New Zealand in 2016 and the United States in late 2016, early 2017," he said.
"We hope IODM will be a stand out backdoor listed stock. We bring slow and steady, we haven't gone bang. We have a great management team and board behind us."

A sign of the boom and bust cycle, backdoor listings have thrived in the past two years thanks to the decline in the mining sector.
In 2014 there were a number of standout stocks which performed exceptionally well, in particular HR tech company 1-Page, which reached a high of $5.69 this year, before slipping back down to trade between $2.50 to $3.30.
Digital media business Migme also performed well, reaching a high of $1.33 this year, before also slipping back to around 85¢.
In 2015, there were no exceptional performers, despite the high number of reverse listings.

Strong performing backdoor listed stocks were Tech Mpire, which is up about 85 per cent to trade at 63¢, and Norwood Systems, which came off a low base of 3¢ to trade at 8¢, a jump of 167 per cent.
Rent.com.au has strong growth prospects for 2016, and is currently up 75 per cent on its opening price to trade at 35¢.
Mr Robert Silverwood said his analysis of the performance of backdoor listed stocks showed that as a portfolio they had performed marginally better than the ASX300.
"Only a handful of these businesses are generating earnings before interest, tax, depreciation and amortisation, but more are generating revenue," he said.
"The ones that did better worked out how to partner with telecommunications companies, secure big banks companies or tap into the health industry. Cloud and mobile applications were ones that have had good results and traction."
Mr Silverwood said there was a chance the ASX could become the NASDAQ of Asia.
"The market really understands this space, it's well regulated and it's much easier for smaller companies to list here in comparison to the NASDAQ and even Hong Kong or Singapore," he said.
"SEEK, Carsales and REA Group have really led the way on this. Investors are happy to put these companies into their portfolios."


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