A new Guvera – Next Big thing?

As an SMSF Specialist and Financial Planner I do not pretend to my clients that I am an investment guru or that I can tell what will be the next big thing!. I believe my job is to guide them in portfolio construction and advise on diversification while bringing up opportunities to their attention that they may not have considered. This includes some IPO’s and in the last few years I have supported HPI, MPL, QVE, BWP, PIC and avoided some I just couldn’t see long-term value in like MYR, Dick Smith (DSH), McGrath (MEA). I never call them all right but I do limit what clients invest in each to what they can afford to lose.

I did not make these decisions for my clients on my own. I relied heavily for support on services such as our own in-house research team at Magnitude and eQR equities research, third-party research services like Morningstar, Intelligent Investor and discussions with peers and those I believe are thought leaders in the SMSF and Investment space. See the Twitter list here

So when I saw the Guvera IPO come up and having followed them from about 2 years ago when I signed up to their beta service it tweaked my interest. But once I had done my own research and read what others had provided I decided this was a no go area for any SMSF client looking to build wealth for retirement as superannuation is intended.

The figures spoke for themselves. $1.2 million in revenue on a $81.1 million loss and a failed attempt to raise money from size-able seed investors. Believe me there are many sources of venture and angel capital funds out there for good start-up ventures with potential so when an idea has good prospects it will receive support and at such an early stage in its life it should not be seeking a listing on the ASX as it has not proved itself.

I struggle to see how a responsible advisor could recommend a IPO like Guvera’s to many SMSF investors let alone 3000 of them. It appears that the main fund-raiser for this IPO is promoting it via related Accounting firms and rumours of SMSFs being set up just to invest in this IPO as their only current asset. I also question if Accountants and Advisers who have become promoters of this IPO are receiving options or referral fees and assume that they are fully disclosing these to clients who must trust them for guidance.  I question whether post July 2016 when Accountants’s will be legally obliged to provide Statements of Advice under a Best Interest’s duty and fully outlining the terms and risks on a personal basis for a client or their SMSF if such an investment could be as targeted to SMSFs.

Its not just me, the Australian Shareholders Association raise concerns about Guvera on Ross Greenwood’s show on 2GB. Listen here for the podcast. http://www.2gb.com/audioplayer/182331

This type of venture is a very, very highly speculative investment suitable for no more than 1-5% of the most aggressive of investors portfolios so I do not believe it should be promoted by private equity through accounting firms or financial planning firms to their SMSF clients. I will call it now as possibly the next Trio or WestPoint.

So that’s my call and guidance I have given to my clients. What are your thoughts? Am I becoming an old fuddy-duddy with no eye to the potential future of this firm?

I hope this guidance has been helpful and please take the time to comment. Feedback always appreciated. Please reblog, retweet, like on Facebook etc to make sure we get the news out there. As always please contact me if you want to look at your own options. We have offices in Castle Hill and Windsor but can meet clients anywhere in Sydney or via Skype. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

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