The obscure US financier backing the ASX’s hot stocks

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LDA Capital is the go-to financier for a handful of speculative ASX plays and its model is now being embraced by local funds.

What do you do if you’re a small listed company with big ambitions to finance, but only small investors backing your vision? One solution is to call Los Angeles investment firm LDA Capital.

Arrangements that allow small companies to raise new capital on the back of retail enthusiasm, are not without risks.The little known LDA Capital was founded in 2018 according to its website which lists former investment banker Anthony Romano and Warren Baker as its leaders.LDA has found a happy hunting ground at the speculative end of the Australian sharemarket.

The way a typical LDA financing arrangement works is as follows: LDA will agree to provide a set amount of equity financing to a company -- say a minimum of $10 million and a maximum of $50 million, over a certain period. The company, at its discretion, can issue periodic capital calls that draw on the funding.

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