The Australian initial public offering (IPO) market bounced back towards the end of 2020 despite the economic impact of the COVID-19 pandemic, a recent report has revealed.
According to the latest “HLB Mann Judd IPO Watch Australia Report” analysing IPO activity over the past 12 months, the number of new listings on the Australian Securities Exchange (ASX) during 2020 grew to 74 compared to 62 in the previous year, with as much as 84 per cent of the year’s total listings recorded during the second half of the year.
By contrast, the “HLB Mann Judd IPO Watch Australia Mid-Year Report” for 2020 revealed the number of IPOs on the ASX had fallen away dramatically in the wake of the coronavirus’s impact on markets.
HLB Mann Judd partner Marcus Ohm, who authored the report, said: “COVID-19 brought with it a unique set of circumstances and the March and June quarters of 2020 saw historically low volumes with only 12 companies listing. The June quarter in particular was heavily impacted by falls in the wider market and high levels of investor uncertainty.
“But there were signs of improvement by September, which was arguably reflected in Australia’s broader economic position, and the December quarter then experienced a resurgence in activity with volumes and funds raised being the highest in a single quarter since 2010.”
The report also found the total funds raised during 2020 were $4.98 billion, which was significantly lower than the $6.91 billion raised in 2019 and $8.44 billion raised in 2018.
Ohm noted the strong activity looked likely to continue during 2021 with 14 companies having applied for a listing at year-end, marking a slight increase compared to the same time last year.
“These companies are seeking a total of $172 million, which is a substantial increase on the $111 million sought at the same time last year. There’s also a notable spread across sectors, with nine sectors represented,” he said.
“It is telling that in a post-COVID-19 recovery environment, the pipeline is quite good compared to previous years, and this reflects the strength of Australia’s economic fundamentals and positive investor sentiment.”
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