Inflated returns on the Australian share market caused the number of floats to almost double in 2004, with most activity in the financial services and biotechnology sector, but the amount of money raised was only 10 per cent more than in the previous year.
According to PricewaterhouseCoopers’ latest survey of sharemarket floats, there were 97 listings in 2004, the most since the tech boom of 1999 and 2000. This almost doubled the 47 floats of 2003. But the 97 initial public offerings (IPOs) in 2004 raised only $7.2 billion, not much more than the $6.6 billion raised in 2003.
According to PWC corporate finance partner, Greg Keys, the poorer relative performance was due to the five largest floats of 2004 – Pacific Brands, ConnectEast, Tishman Speyer Office Fund, Babcock & Brown and Just Group – raising over $1 billion less than the corresponding five largest floats the year before.
Nevertheless over 60 per cent of the 97 IPOs were above their issue price by the end of 2004, with most of these companies also outperforming the S&P/ASX 300 Industrials Index.
As in previous years, most start-ups were health and biotechnology companies (21) and investment and financial services companies (16). The number of investment and financial services companies almost doubled on 2003, raising $1.6 billion between them. Babcock and Brown’s cashbox was the fourth largest float for 2004, raising $550 million.
Listed property trusts (LPTs) also experienced significant growth with six listings in 2004, up from four in 2003. All up these six trust raised $704 million, over a 1000 per cent increase on the $62 million raised by LPT floats in 2003. The huge increase can largely be attributed to the listing last year of the Tishman Speyer Office Fund which raised $560 million, the third largest float in 2004.
Despite predictions of a further rate hike, PWC predicted that IPO activity would remain active early this year but would “settle down” towards the end of 2005.
