Australian Shares, Investments

IPO market remained poor in 2023


The number of IPOs and the capital they raised in 2023 established an all-time low since 2004 when analysis of the activity was first performed.

The number of initial public offerings (IPO) from domestic entities totalled only 32 in 2023 and managed to raise a modest $847 million in capital, according to the HLB Mann Judd “2024 IPO Watch Australia” report.

The total number of IPOs represented an 83 per cent decrease compared to the record-breaking number of 191 in 2021 and is the lowest number ever recorded since the inception of the report in 2004.

Similarly, the amount of capital raised was the lowest ever seen and was the first time the total figure did not surpass $1 billion.

HLB Mann Judd Perth partner and author of the report Marcus Ohm identified one significant factor currently stifling the IPO market.

“What’s been impacting [the numbers]? Interest rates have been a large part of it in terms of restricting investment in IPOs,” Ohm told a media briefing in Sydney this week.

“It’s made the market really, really difficult and you’ve had to pretty much been [part of] a specific sector supported strongly by investors [interested in] the resources sector [to list a company].”

To this end, the materials sector accounted for 23 of the total 32 listings, or 72 per cent, in 2023. The majority of these IPOs, 15 listings, originated in Western Australia.

On a positive note, 29 IPOs were able to raise the amount of capital intended, which represented 91 per cent of all listings, an improvement on 2022 when only 70 per cent of newly listed companies achieved the nominated targets.

From a return perspective, 18 listings delivered a first-day gain, with the average appreciation being 6 per cent. However, this initial performance fell away over time and only 11 companies were able to maintain or exceed their listing price at 31 December 2023.

Further, the forecast IPO activity for 2024 is subdued with only five floats currently registered with the Australian Securities Exchange. These listings are attempting to raise $10 million in capital.

According to Ohm, an improvement in the IPO market is unlikely until there are significant changes on the macroeconomic and geopolitical stages.

“The environment is likely to remain tough for companies in all industries, including the resources sector, particularly if the RBA (Reserve Bank of Australia) continues to raise interest rates. However, if the gold price remains above the US$2000 level, or lithium goes on a run, this might act as a catalyst for greater interest in the junior explorers and a higher level of IPO activity overall,” he said.

The decline in IPOs was flagged in June by the HLB Mann Judd “IPO Watch Australia Mid-Year Report”.


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