The latest analysis of the initial public offering (IPO) market has shown 2024 is experiencing low levels of company listing activities as a result of several economic factors.
The “HLB Mann Judd IPO Watch Australia Mid-Year Report” revealed there were only 13 listings on the Australian Securities Exchange (ASX) for the six months to June 2024.
“[The result] is slightly down from last year, which [saw] 14 listings. It’s been very moderate for about 18 months now, the IPO market, and I think a lot of businesses, if it’s not a really quality project or quality offering, are just deferring or looking for alternatives to an IPO,” HLB Mann Judd partner and report author Marcus Ohm noted.
Ohm acknowledged the current state of commodity prices and interest rates were the main drivers for such low IPO activity.
While the number of listings was low, the amount of capital raised was strong, but was achieved as a result of unusual circumstances.
“The total funds raised was $809.5 million – fourfold increase from [the $149.9 million] we saw at the same time last year. But really the reason for that was there were two [significantly] large listings during the period. They raised $660 million between them so if you strip those listings out, it’s not good news for the number of listings and the amounts raised by those listings,” Ohm said.
The specific IPOs accounting for the majority of money raised involved materials company Metals Acquisition (ASX: MAC), which generated $325 million of capital, and Guzman y Gomez (ASX: GYG), which attracted $335 million from investor participation.
IPO share price performance was also solid over the first half of the calendar year, but again Ohm suggested caution was required when interpreting the result.
“Regarding share price performance, the new listings on average experienced a first-day gain of 32 per cent, but you have to be a little bit careful of that because this is a very small sample size of only 13 listings. The average gain by the end of June was a little bit lower down to 30 per cent,” he said.
Further, the report confirmed IPO activities for the remainder of the year continue to be modest.
“There are really only four companies at the moment that have a confirming listing date seeking $110 million. Most of those [companies are in the] materials [sector],” Ohm noted.
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