The Greatest Business On Earth
I have discovered what I believe to be literally the best business on Earth.
Facebook? Google? Alibaba? Fraud manufacturing?
It’s the Australian Securities and Investment Commission (ASIC) corporate database, ASIC Connect. This thing is a moneymaking machine. Let me put this to you.
- Zero customer acquisition and marketing costs – if you need a corporate report, ASIC Connect is the only place to go.
- An absolute moat – where else can you get these documents?
- Zero manufacturing costs – every company above a certain size has to file their reports, change of shareholder forms, etc as a matter of course.
- Zero regulatory concerns (obviously)
- Minimal technology/operating costs – database is clunky but functional, and doesn’t look like it’s had a lot of $$ spent on it.
- Close to zero admin costs – filing reports and selling them is all automated (or should be), and there are no refunds. There are a few analysts that are employed to handle regulatory complaints. If you spun it off, you’d leave the analysts in ASIC employ and just take the database.
- Unlimited pricing power – files cost $20+ a pop and take it from me, you’ll need more than $600 to understand a business of anything more than basic complexity.
- Wild guess I’d say it is capable of earning something north of 50% NPAT margins.
Course, putting prices up would make it harder for journalists and investors to catch fraud, but who cares about that?
According to ASIC’s FY17 annual report it raised $920 million in fees for the government in that year. There were 90.6 million searches of various corporate databases (flat YoY), of which approximately 95% were free of charge. There were 54.6 million searches of the companies registry (the one I refer to below, up 4% YoY) and 32.2 million searches of the business names register, down 4% YoY. There were 3.8 million searches of ASIC’s professional registers, down 22% YoY. I couldn’t find specific data on the fees raised by the companies register, but if 5% were paid searches at $20+ apiece it suggests at least $54.6 million in fees.
Lemme walk you through it:
- Application for Registration as a Public Company – $20
- Company Constitution – $40
- Any addendums that might exist – $20 apiece
- Change of Company appointments/officeholders (every time directors change) – $20
- Change to share structure (every time the company issues shares) – $20
- Resolution of change of share structure (share cancellation/consolidating etc) – $20
- Annual financial report – $40
Straight up you’re looking at ~$200+ for the first year and easily another $100+ for every year after that that a company’s been listed – and that’s if you’re lucky and it only has a small number of shareholders. And that is just one company. Does your business have a subsidiary? Rinse and repeat. What if it has like 20 subsidiaries and they’re shuffling directors and shareholders around as a means of transferring money to China or the Caymans? Tough shit.
If you’re looking at these documents, you are probably looking for fraud. You want to track the investors and the shareholdings over time. You want to know what the company constitution says. You definitely want to read all of their financial reports and appointments of officeholders. You pretty much have to buy every document that’s ever been issued within the last 3-5 years to get any idea of what you’re looking at (unless you’re lucky enough to catch the problems soon after inception).
Find mis-statements and report them to the regulator? They’ll order the company to file updates. Then you gotta purchase the requests for correction for $20 a pop. I mean:
Greatest business on earth.
I have no interest in any company mentioned. This is disclosure and not recommendation, blah blah.