The Australian initial public offering (IPO) market experienced a significant decline in the first six months of 2023, with both the number of listings and the amount of capital raised falling sharply.
“The number of IPOs in 2023 slowed really dramatically. We’ve only had 14 listings so far in the first six months of the year. That’s a really big decline from what we saw in the prior year, which was 59 [listings],” HLB Mann Judd Perth partner Marcus Ohm revealed at the release of the firm’s “IPO Watch Australia Mid-Year Report”.
“All of the companies listed have been pretty much small-cap [companies, with] 12 of the 14 [falling into this category with a capital level of] $100 million or less.”
Ohm acknowledged the impact the situation has had on the amount of capital raised through these new listings.
“Because we’ve had less IPOs, probably unsurprisingly the funds raised have fallen quiet significantly. It’s down to $150 million raised, which is really quite incredible,” he noted.
This amount represents an 81 per cent drop in comparison to the same period in 2022 when a total of $790 million was raised from IPO activity. The stark result is more evident when compared to the initial six months of 2021 when $2.9 billion was raised.
According to the report, the two large-cap organisations that listed raised $50 million between them.
Of the 14 listings, 12 companies were from the materials sector with the remaining two coming from the technology and energy sectors.
On a positive note, all of the completed IPOs were generally successful in attaining their targeted subscription levels, with 92 per cent of participating organisations achieving this aim. In 2022, the desired subscription levels were only realised by 73 per cent of companies entering the Australian Securities Exchange for the first time.
Ohm pointed out the high level of inflation is one of the main reasons for the decline in the IPO market, along with the resultant monetary policy from the Reserve Bank of Australia.
“[Higher interest rates] are impacting things like valuations, certainty in the market and cost of debt, [which are significantly influencing listings],” he said.
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