It was a slow start to the year for the initial public offering (IPO) market, but new listings are still performing well, according to the HLB Mann Judd IPO Watch Australia Mid-Year Report.
Marcus Ohm, HLB Mann Judd partner and author of the report, said the new listings had done well in terms of share price and subscription levels.
“It’s not been a stellar year for IPOs by any stretch of the imagination, it’s been quite a subdued start to 2019,” Ohm said.
“January and February were quiet, it wasn’t until May and June we saw a pickup in the numbers, which had 14 listings in total.”
A total of $823 million was raised during the first half of the year, compared to $2.5 billion in 2018 and $1.9 billion in 2017.
The first six months of the year had only seen 23 companies listed, which may have been reflective of market conditions from the second half of 2018.
“As we know, markets rebounded strongly from that point, but from the period up to until December it was quite a different market,” Ohm said.
“It was difficult for people in those circumstances to get subscriptions for IPOs.”
For small caps, it was only 13 listings for the six months, which was low compared to 31 for the same period in 2018.
Materials had only three listings, compared to 16 from last year which Ohm said perhaps reflected the broader macroeconomic issues.
“The big trend was the fall in small caps, which is a big contributor most of the time to the number of listings,” Ohm said.
“Unfortunately, it’s mostly influenced by the material sector reduction, which had a poor year.”
“The number of listings was down, dollars raised was down, but from a share price perspective it’s actually been positive.”
Of the 23 IPOs, 17 had seen first day gains averaging 21 per cent and by the end of June the average gain was 63 per cent across all IPOs.
“This is a contrast of what we saw in 2018, where they were underperforming compared to the market overall,” Ohm said.
“The number of the industries which have IPOs stayed consistent with 2018, with 19 of 23 new stock gaining full subscriptions, so those companies that come to market have been pretty well supported.”
