Time Required: 2 minutes⏱️

Prerequisites: Optional: "How to boost shareholder reachability and engagement"

Outcome: Understand the importance of High Net Worth investors (HNWs)

While a HNW does not necessarily have a fixed definition, rather referring to an individual with a large amount of cash or value stored in assets, we often lump them in with sophisticated and professional investors. A sophisticated or professional investor is by definition HNW, but a HNW will only be sophisticated/professional if their wealth is verified by a licensed accountant.

A sophisticated investor is defined as:

A person who "has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year"

A professional investor is defined as:

"A person who has or controls gross assets of at least $10 million (including any assets held by an associate or under a trust that the person manages)."

Our platform classifies your investors as potential HNWs using the following criteria:

This is done so that you can identify HNWs on your registry quickly and easily.

In either case what is clear is that a HNW investor is in control of a significant amount of capital. But why is that important for you?

The most common form of raising on the ASX is a share placement. Placements are issues of shares to new, sophisticated and professional investors for the purposes of raising capital. By nature of their structure, placements can only be participated in by HNWs, so it is in a company's best interest to attract and maintain a network of HNWs for raising. However, that isn't where the value of HNWs ends.

HNWs also have greater capacity to participate in common raising alternatives, such as SPPs or entitlement offers. HNWs on average have about 2475% larger positions than the typical retail shareholder on a registry, and thus are capable of greater participation in an entitlement offer. When it comes to SPPs, while they may be capped, again on average HNWs will invest more than a typical retail shareholder.

HNWs are also typically easier to reach, being 38% more likely to have an email attached to their holding than a retail investor. This means less effort from you in keeping them engaged and informing them about upcoming opportunities like SPPs.

HNWs are also tend to accumulate over longer periods of time and hold onto their shares for longer, averaging 22% longer hold times than retail shareholders.

When considering any kind of capital raise, whether it is short-term like a placement or conducted over a longer period of time like an SPP, the stickiness or willingness to hold onto shares is an important factor. Even outside of these raises, you should be aiming to onboard investors that are long-term focused and are advocates of the stock, as they will hold for much longer periods of time.

HNWs, like retail investors, require direct communication and engagement to get onboard the story and become strong supporters. The same strategies you would use for retail investors can be used for HNWs. Running investor events, putting on webinars and presentations and utilising your investor hub will all attract HNWs, along with retail investors, onto your registry. The more important part is communication with them once they are there. HNWs, while seemingly less vocal than the retail population, still have a voice and listening to their concerns and queries is key for keeping them invested in your story.

When it comes to your registry, you likely have a large number of HNWs who are not identified as HNWs. By communicating the benefits to your shareholders of identifying themselves as sophisticated or professional, such as being able to participate in placements, you can encourage them to self-identify as HNWs.