Uncertainty persists in IPO market, says HLB Mann Judd
The initial public offerings market has remained subdued due to the challenging economic environment, according to an HLB Mann Judd mid-year report.
Higher interest rates and persistent inflation have restricted listing activity in the initial public offering (IPO) market, the HLB Mann Judd IPO Watch Australia mid-year report has revealed.
The report, published in July, found there were 13 listings in the first six months of this year, only one less than the same period last year.
Total funds raised in the first six months of 2024 were $809.5 million which is a 440 per cent increase from the same period last year.
HLB Mann Judd Perth partner Marcus Ohm said 2024 results follow “lacklustre” results recorded in 2023.
“This follows a lacklustre year for IPOs in 2023, when the total funds raised from ASX listings was $847 million, the first time since 2012 where the total amounts raised did not exceed $1 billion,” Ohm said.
“While the number of listings was down compared to the first half of 2023, the good news was the capital raised was much higher than the first half of 2023 and almost the same as the full 2023 year due to the presence of two larger listings during the period.”
According to the report, Metals Acquisition was the first big listing of the year, raising a total of $325 million in February.
This was followed by the listing of Guzman y Gomez in June which raised $335 million from investors.
These two listings are the main drivers behind this year's $809.5 million result during the first six months.
Ohm said these two large IPOs were fully or oversubscribed, which highlighted demand for the right listing on the ASX and both performed well on their first day.
The report also reflected an improvement in the share price performance of the new listings in comparison to the previous year.
“The average first day gain across all new listings was 32 per cent for the first six months of 2024, compared to the average first day gain of just six per cent for the full 12 months of 2023,” Ohm said.
“By the end of June 2024, the average increase over the listing price was 13 per cent, compared to an average year-end loss in 2023 of 10 per cent.”
The average first day gain across all new listings was 32 per cent for the first six months of 2024, a significant increase from the average first day gain of 6 per cent over the entirety of 2023.
In June, the average increase over the listing price was 13 per cent, compared to an average year-end loss in 2023 of 10 per cent.
The results demonstrated new IPOs performed well relative to the wider share market as the ASX all ordinaries closed just above 8,013 at the end of the period.
This represented a two per cent increase for the period with the IPO performance indicating a positive “investor appetite” for new listings.
Ohm said during the first half of 2024, six industry sectors contributed new listings during the period, up from three sectors in the first half of 2023.
“Material listings dominated, comprising seven of the thirteen listings in the period, including Metals Acquisition.”
“All six sectors recorded a first day gain on average. Both the Materials and Diversified Financials sectors recorded average first day gains of 40 per cent across all listings, followed by Consumer Services, with Guzman y Gomez up 36 per cent.”
Of the 13 listings made in the first half of 2024, most were small cap listings by size.
For the first half of the year, small cap listings raised $90.5 million across 10 listings during the period and contributed 11 per cent of the funds raised.
In the first half of 2023, small caps contributed for 67 per cent of total funds raised.
Ohm said the average amount raised per listing by small caps increased marginally to $9.05 million in 2024 compared to the average of $8.3 million in the first half of 2023.
“However, looking ahead, uncertainty persists regarding a recovery in the IPO market and the extent of any wider recovery remains to be seen, given current economic challenges and interest rate and volatility concerns.”
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