Marcus Ohm
The market for initial public offerings (IPOs) has ground to a halt in 2023, with just 14 new listings in the first six months of the year, according to the latest HLB Mann Judd IPO Watch Australia Mid-Year Report.
This is a sharp decline on the same period last year when there were 59 new listings, and also a significant drop on the second six months of 2022 which saw 28 listings.
Marcus Ohm, author of the report and partner at HLB Mann Judd Perth, says the first half of 2023 has proven to be one of the most challenging periods for IPOs in Australia.
“The first half of 2023 has been one of the quietest six-month periods for IPOs since the late-2000s – lower even than during the global financial crisis or the height of the COVID-19 pandemic.
“The lack of activity reflects the persistently difficult environment for IPOs that emerged towards the end of 2022, when there was a noticeable slowdown in IPO activity in the second half of the year.
“This market remains difficult going into the second half of 2023, thanks to the combination of unfavourable macroeconomic factors and poor investment sentiment. Of the 14 listings in the first half of the year, six were in January, three in February and March, and only five in the whole of the second quarter. However, there are signs the market will improve in the second half of 2023 and into 2024,” he says.
The lack of new listings in the six months of the year meant there was also a significant decline in the overall amount raised.
A total of $150 million was raised during the period, representing an 81 per cent reduction from the $790 million raised in the same period of 2022 and a further fall from the $2.9 billion raised in the first half of 2021.
There were 12 small cap listings*, and just two large cap listings during the period, which raised $50 million in total.
Mr Ohm says despite the significant fall in overall funds raised, the 12 small cap listings raised $8.3 million each on average.
“This is a slight increase on the average of $7.6 million raised in the same period in 2022. However the $50 million raised by the two large cap listings was significantly lower than the $384.4 million raised in the first half of last year.
“The companies that completed their IPOs were generally successful in achieving their subscription levels, with 92 per cent achieving their target compared to 73 per cent for the same period in 2022.”
Mr Ohm said the pipeline for IPOs as at 30 June 2023 was limited, at this stage, however some larger potential floats may come to market later in the year.
“There was just 11 potential upcoming floats listing on the ASX, seeking to raise $693 million. One has already listed in July – Redox Limited (ASX: RDX) which raised $402 million.
“Of those in the pipeline, seven are Materials companies, reflecting the ongoing dominance of the resources sector. In the first six months of the year, there was only one listing outside of the resources sector, Acusensus Limited (ASX: ACE) which listed in January.
“More than half of the 12 Materials companies that listed in the first half of the year were from Western Australia, which has historically been a strong contributor to the small cap Materials listings, and we expect this trend to continue for the remainder of 2023 and into 2024.
“Surprisingly, only two of the materials companies that floated in the first half of the year were exploring for gold as a primary commodity, despite the supportive outlook for gold.
“Overall, we expect the remainder of 2023 to be challenging for the IPO market, with tight capital markets. The degree of uncertainty across global markets, weaker indicators, and a slowdown in the world economy, are all impacting the IPO market. That said, we expect a level of improvement in the second half of the year and into 2024,” he says.
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