Off-market investments in Australia are capital raises, placements, and IPO allocations distributed privately to eligible wholesale investors, not the general public. Access is governed by Section 708 of the Corporations Act 2001, which allows offers without a prospectus to sophisticated and professional investors. Eligible investors gain entry to discounted share pricing and deal flow unavailable on the open market. This guide explains how the process works, who qualifies, and what to expect.
Introduction
Most investors only see what the market makes available to the public. A separate tier of capital market activity operates simultaneously, reserved for those who meet a specific eligibility threshold under Australian law.
In 2024, the ASX ranked first globally by volume of capital raising transactions for the seventh consecutive year, with $35.9 billion raised across 1,271 transactions. A significant portion of that activity was distributed privately through broker networks and wholesale platforms, bypassing public marketing entirely.
Understanding how off-market investments in Australia work is essential for any eligible investor seeking access to deal flow beyond what the open market provides. This article explains the legal structure, eligibility requirements, types of opportunities available, and the practical steps to gain access.
What Are Off-Market Investments in Australia?
Off-market investments in Australia are securities offers distributed privately to a select group of eligible investors, without broad public advertising or a formal disclosure document such as a prospectus. They include ASX placements, pre-IPO raises, IPO allocations via broker channels, and private company funding rounds.
The key distinction is distribution, not secrecy. When a company raises capital off-market, it is choosing to reach a targeted investor base through licensed advisers and wholesale networks rather than through a retail prospectus open to the general public. The offer is real, the securities are the same, and the company is often listed or preparing to list on the ASX. The difference is who gets notified and when.
Common examples include:
- ASX placements distributed to institutional and wholesale investors before public announcement
- Pre-IPO rounds offered to sophisticated investors at a discount to the anticipated listing price
- IPO allocations distributed via broker networks rather than the retail prospectus process
- Private company funding rounds shared with verified wholesale investor groups
Each structure carries its own terms, timelines, and risks. What they share is that retail investors without the required classification generally cannot access them.
The Legal Foundation: Section 708 of the Corporations Act
Section 708 of the Corporations Act 2001 (Cth) is the legislative framework that permits companies to make securities offers without a prospectus, provided the offer is made to a qualifying category of investor. It is the legal basis on which the vast majority of off-market capital raises in Australia are structured.
Under Australia’s fundraising rules in Chapter 6D of the Corporations Act, offers of securities generally require a prospectus unless an exemption applies. Section 708 sets out the conditions under which that disclosure requirement does not apply.
The most commonly used exemptions for wholesale capital raising are:
- The sophisticated investor exemption (s708(8)): Allows offers to investors who meet financial thresholds and hold a current accountant certificate
- The experienced investor exemption (s708(10)): Allows an AFSL-licensed adviser to make offers to investors they have assessed as having sufficient prior experience in securities investing
- The professional investor exemption: Covers entities such as APRA-regulated funds, bodies with gross assets exceeding $10 million, and other categories defined in section 9 of the Act
It is important to understand that while Section 708 exemptions remove the requirement for a prospectus, they do not eliminate all regulatory obligations. Anti-hawking provisions, anti-misleading conduct rules, and AFSL obligations all continue to apply. The framework reduces disclosure requirements for eligible investors; it does not remove legal accountability from issuers and advisers.
For a detailed breakdown of how s708 investor classification operates in practice, including the evidence standards required, that page provides a practical reference.
Who Is Eligible to Access Off-Market Deals?
To participate in most off-market capital raises in Australia, an investor must qualify as a sophisticated investor under Section 708 of the Corporations Act. The primary financial thresholds are net assets of at least $2.5 million or gross income of at least $250,000 per annum for the two most recent financial years.
Under section 708(8) of the Corporations Act 2001, an individual may be classified as a sophisticated investor if they hold net assets of at least $2.5 million or earn gross income of at least $250,000 per annum for two consecutive years. These thresholds have remained unchanged since the Act was introduced in 2001. A 2024 Parliamentary inquiry made no recommendation for immediate reform, meaning the current criteria remain in force as of early 2026.
Meeting the financial threshold alone is not sufficient. An investor must also hold a current certificate from a qualified accountant confirming they satisfy the criteria.
The Accountant Certificate Pathway
Under s708(8), an investor obtains a certificate from a qualified accountant confirming they meet either the net asset or income threshold. This certificate has a defined validity period. Platforms and brokers distributing off-market offers will typically require this document before sharing deal details or accepting applications.
The accountant must be a qualified CPA, CA, or registered tax agent. The certificate is not a formality. ASIC has expressed concern about the use of certificates to circumvent retail disclosure protections, including through trust or company structures. The certificate must accurately reflect the investor’s personal financial position.
The Experienced Investor Pathway
Under s708(10), an AFSL-licensed adviser may determine that an investor has sufficient prior experience in securities investing to assess the risks and merits of an offer, even if they do not hold a formal certificate. The licensee must document their reasoning in writing, and the investor must acknowledge in writing that no disclosure document has been provided.
This pathway is less commonly used for ongoing platform access. Most structured wholesale platforms rely on the accountant certificate under s708(8) as the primary verification mechanism.
For a step-by-step guide on meeting the requirements, the sophisticated investor qualification guide covers the process in detail.
How Pricing and Allocation Work
One of the primary reasons sophisticated investors seek off-market deal access is pricing. ASX placements are typically issued at a discount to the prevailing market price, compensating investors for the speed of commitment and the reduced disclosure compared to a retail prospectus process.
Pricing discounts on ASX placements typically range from 2% to 15% below the current market price. The size of the discount reflects the urgency of the raise, the size of the issuer, and current market conditions. A company raising capital under strong investor demand may offer a smaller discount. A smaller company raising quickly to meet a milestone may offer a larger one.
The ASX Listing Rules limit placements to 15% of issued capital without requiring shareholder approval. This structural constraint means demand for allocation can exceed supply, particularly in high-quality raises. Investors should expect:
- Oversubscription: More capital demanded than the issuer requires
- Scale-backs: Final allocation may be less than the amount applied for
- Priority systems: Allocation decisions may reflect investor relationship history, ticket size, or past participation with the distributing adviser
ASX placements are usually not publicly announced until after they are completed and settlement is confirmed. Registered wholesale investors with a dedicated broker relationship receive notification during the offer window, which can close within 24 to 48 hours.
What Types of Off-Market Opportunities Exist in Australia?
Off-market investments in Australia span several distinct structures, each with different risk profiles, timelines, and eligibility conditions. The four main categories accessible to sophisticated investors are ASX placements, pre-IPO raises, IPO allocations via broker channels, and private company funding rounds.
ASX placements are the most common structure. A listed company issues new shares to selected investors at a fixed price, typically below the current trading price, to raise capital quickly. These are the deals most frequently distributed through licensed brokers and wholesale platforms.
Pre-IPO raises occur before a company lists on a public exchange. Investors receive shares at a price below the anticipated IPO price. This compensates for the illiquidity during the period before listing and the additional risk of the listing not proceeding as planned.
IPO allocations via broker channels give wholesale investors access to shares in an initial public offering before trading commences. Rather than applying through a retail prospectus, investors receive an allocation through their broker relationship. ASX IPO access through a licensed capital markets firm provides a structured pathway to these allocations.
Private company funding rounds include seed, venture, and growth stage raises for companies not yet listed. These carry the highest illiquidity risk but may offer the earliest entry point for investors with appropriate risk appetite and long investment horizons.
What Are the Risks You Need to Understand?
Off-market does not mean lower risk. In several respects, participating in private capital raises carries greater risk than buying shares on the open market, primarily because timelines are shorter and disclosure is reduced relative to a full retail offer.
Key risks to understand before participating include:
Liquidity risk. Shares received in a placement may be subject to escrow periods or market conditions that make them difficult to sell quickly. Private company shares cannot be sold until a liquidity event, such as an ASX listing or trade sale, occurs.
Information risk. Wholesale offers are distributed with less formal disclosure than a retail prospectus. Investors are expected to conduct their own due diligence. Less public analyst coverage exists for smaller companies, and deal windows are short.
Dilution risk. When a company issues new shares through a placement, existing holders experience dilution of their proportional ownership. If the market reacts negatively to the raise, the share price may fall below the placement price.
Execution risk. The company may not achieve the operational outcomes the raise was intended to fund. Capital raised does not guarantee business success.
The risk disclosure obligations that apply to Australian wholesale raises are worth reviewing carefully before committing to any deal. Being a sophisticated investor means taking on a higher degree of personal responsibility for investment decisions.
How to Access Off-Market Deals in Australia
Accessing off-market investments in Australia requires registration with an AFSL-licensed platform or broker, verification of your eligibility as a wholesale investor, and assignment to a relationship manager who can notify you of relevant opportunities as they arise.
The practical pathway breaks down into three stages. First, confirm your eligibility by reviewing the financial thresholds and obtaining a qualified accountant certificate if you meet them. Second, register with a licensed capital markets firm that structures and distributes wholesale deals. Third, work with your assigned broker to receive deal alerts, assess opportunities, and submit applications within deal windows.
At 708 Deals, operated by Peloton Capital (AFSL 406040), every registered investor is assigned a dedicated senior stockbroker with direct access to ASX placements, IPO allocations, and off-market raises structured by the firm. Deal notifications are sent to registered investors before allocation closes.
Register for deal access to be assigned a dedicated broker within 24 hours, or book a call to discuss your eligibility before registering.
Conclusion
Off-market investments in Australia are a legitimate and well-regulated part of the capital markets. They are not a shortcut or a loophole. They are a separate distribution channel, reserved by law for investors who meet the financial and compliance criteria established under Section 708 of the Corporations Act.
The three things eligible investors need to understand are: the legal framework that governs access, the financial thresholds that determine eligibility, and the practical steps required to register with a licensed firm and receive deal flow.
If you meet the $2.5 million net asset or $250,000 income threshold and want access to ASX placements, IPO allocations, and off-market capital raises, the next step is straightforward. Register with 708 Deals today, or contact the team directly to confirm your eligibility and have a dedicated senior stockbroker assigned to your account within 24 hours.
This article provides general information only and does not constitute financial or legal advice. Always review offer materials carefully and consider professional advice in relation to your personal circumstances.
Frequently Asked Questions
What qualifies as an off-market investment in Australia?
An off-market investment in Australia is any securities offer distributed privately to eligible investors rather than through a public prospectus. This includes ASX placements, pre-IPO raises, IPO allocations via broker channels, and private company funding rounds. The defining characteristic is private distribution to a qualified investor pool, not the nature of the underlying asset.
Do I need a prospectus to invest in an ASX off-market placement?
No. Under Section 708 of the Corporations Act 2001, offers made to sophisticated and professional investors are exempt from the requirement to provide a prospectus. However, the investor must satisfy the eligibility requirements and the issuer must comply with all other applicable obligations, including anti-hawking provisions and continuous disclosure rules.
How do I qualify as a sophisticated investor under Section 708?
To qualify under s708(8) of the Corporations Act, you must have net assets of at least $2.5 million or gross income of at least $250,000 per annum for the two most recent financial years, confirmed by a current certificate from a qualified accountant. Alternatively, under s708(10), an AFSL-licensed adviser may assess you as having sufficient prior investment experience to participate in a specific offer.
What discount do investors typically receive in an ASX placement?
Placement pricing discounts typically range from 2% to 15% below the prevailing market price, depending on the size of the issuer, the urgency of the raise, and current market conditions. The discount compensates investors for the speed of commitment required and the reduced disclosure compared to a retail offer. Larger, more established companies tend to offer smaller discounts.
Can I sell shares received in an off-market placement immediately?
In many cases, yes, once settlement is complete and the shares are quoted on the ASX, they can be sold on-market. However, some placements include voluntary or regulatory escrow periods, and market liquidity can affect your ability to exit at a desired price. Pre-IPO and private company shares cannot be sold until a liquidity event occurs. Always confirm the specific terms of each offer before committing capital.