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Atlassian to move to the UK: Five reasons businesses are heading offshore

Wednesday, 8 January 2014 | By Cara Waters

Former Smart50 winner Atlassian is moving its domicile to the United Kingdom this year to get ready for an initial public offering outside Australia.

 

Documents filed with the Australian Securities and Investments Commission late last month show Atlassian will reincorporate in England and Wales, following a vote of the technology company’s shareholders.

 

Atlassian has grown from a small start-up into one of the biggest companies of its kind, employing 530 people across the world and turning over more than $100 million.

 

In 2010, Accel Partners paid $60 million for a stake in the business, setting off a trio of investments in Australian companies.

 

The company was contacted for comment, but no reply was received prior to publication.

 

Atlassian isn’t the first company to move offshore to further its growth, and it certainly won’t be the last. Here are five reasons Australian businesses are heading offshore.

 

1. The window is open for IPOs

 

Gary Nicholson, a partner in Ernst & Young’s transactions team, told SmartCompany there is currently strong institutional demand for IPOs both in Australia and overseas.

 

“We talk about the IPO window at certain points in the investment cycle, and we are at that point at the moment where there is strong support and quite a number of companies looking to raise capital,” Nicholson says.

 

Nicholson says there were more IPOs in the fourth quarter of 2013 in Australia then there were in the whole of 2012 and strong listings overseas as well.

 

2. Peer companies

 

Nicholson says many Australian companies look to list overseas as there are more companies similar to them.

 

“The issue of peer companies is really important, the more peers you have, the better understanding of your company and more liquidity of your stock,” he says.

 

“In the UK, the advantage would be there are more comparable companies. The Australian market is quite small, so a lot of tech companies fail to have enough investor support in Australia.”

 

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3. Appetite for investment

 

There’s more appetite for investment for innovative industries offshore, according to Tim Cheong, a partner in the tax advisory group at Crowe Horwath.

 

“I think it is industry specific, we see it particularly with innovative industries like it, more so because the appetite for investment through the UK and US is a lot higher,” he says.

 

“We see smaller companies struggling to raise capital as well and it is often easier offshore.”

 

4. Lower corporate tax rate

 

Cheong says lower corporate tax rates are also an incentive for businesses to move offshore.

 

“We see movement offshore for the tax rate as the corporate tax rate hasn’t moved here compared to the UK, where it is moving to a 20% rate down from 24%,” he says.

 

5. Attract employees

 

For technology companies like Atlassian, employees are often international and highly mobile.

 

Cheong says a move to the UK may allow a company to attract more employees, as company share schemes used to incentivise and reward employees are easier to establish and administer there.

 

This article first appeared on SmartCompany.

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