The number of companies on our stock exchanges is declining, as big, privately run funds take over established companies and increasingly provide capital for new startups.
Even when it comes to borrowing, there is a growing trend to avoid the middleman by bypassing the banks in favour of raising money directly from well-healed lenders.
While public investment markets such as stock exchanges still tower over private players, and our big banks dominate the lending landscape, the shifts are unmistakable.
According to ASIC chair Joe Longo, key risks around conflicts of interest, uncertainty over valuations, liquidity and debt levels are emerging as private financing becomes more prominent.
But, given it is so far mostly well-funded investors participating in this trend, what — if anything — should be done?
“The critical point is understanding whether there is a need for intervention …” he says.
“Whether it is for ASIC or another regulator to consider, or whether we leave the market and wholesale investors to their own devices.”
That last option looks increasingly unlikely.
Stephen Mayne (Shareholder Advocate and Professional Pain in CEO’s Arses) has been onto this for the last couple years on Alan Kohler’s, The Money Café. He has interesting spiels on it.
For me, i think its a simple fix, and a timely one given people’s fiscal budget worries.
Tax.
Introduce higher taxation for Private ownership rather than on listed companies. It’ll even out the trade offs.
The problem is there are fewer incentives to surrender to the complications of public markets exposure. And this will continue while we have such an unequal distributions of capital flows.
It is time for a new Government to Business bargain for the higher end of medium size to large companies. List, or pay more tax.
Let the businesses run off shore who refuse to pay more tax. You want to minimise the Nation’s risk by keeping at arms length companies obsessed with secrecy or tax minimisation as a growth strategy. Both are inherently destabilising.
Great thing is, now is the time for a changes like this. The Americans just blew up their own neoliberal world order, time for a new kind of capitalism to come forth. The Americans have chosen ‘crony capitalism’, whoopdeedoo for them, lets see how that goes, we as Australians can and should choose our own path. Theres no shortage of good economic alternative ideas out there.