Businesses planning to float on the Australia Stock Exchange are likely to face less competition this year, with a business advisory firm noting that the volume of listings — and investor appetite — has been subdued in recent months.
Launching its respected IPO Watch Australia Report on 2018’s stock market activity, HLB Mann Judd noted that initial public offerings (IPOs) for the smaller end of the market — that is, businesses with a value below $100 million — had been lower than the previous year, and that their performance on the stock exchange had also proved to be lacklustre.
“It was a really interesting year in a lot of respects, last year, because it started off so positively and the final quarter of the year was certainly more challenging,” the report’s author and partner in the firm’s corporate advisory division, Marcus Ohm, said.
“We saw a total of 93 listings last year, that’s a little bit down on 2017.”
He noted that around three-quarters of listings are the smaller end of the market.
Mr Ohm said that it was the first fall in the volume of listings for several years, and was largely driven by the lack of spike typically recorded in the December quarter.
The values of those newly listed companies also drifted southwards, in line with falls on the broader share market.
“It was really quite underwhelming towards the end of the year, and the IPOs suffered in line with the general market.
“The average loss across all companies by the end of the year was 18 per cent.”
A number of factors are likely behind the poorer showing, Mr Ohm suggested, including the US–China trade war, domestic economic conditions and the banking royal commission, which has seen loans to investors dry up.
According to Mr Ohm, the first half of 2019 is looking equally as subdued, with his firm recording only 17 companies “in the pipeline” for listing as of December 2018, compared with 37 at the same time last year.
Despite the sluggish activity and “underwhelming” share market performance, the 93 firms to have listed raised a collective $8.44 billion in funds — although just three of those, including Viva Energy Group, raised the lion’s share, accounting for $4.75 billion.
Materials, or mining, companies remained among the most prominent companies looking to list on the ASX, followed by technology firms.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.