IPOs hit three-year high
Initial public offering (IPO) activity has climbed to a three-year high with the resources sector leading the way, according to a new survey.
The Deloitte Corporate Finance IPO survey showed that an expected surge in floats this month would boost the total number of IPOs to 92 by the end of the year, more than double the number in 2009.
The value of the funds raised is also on the rise, up to $7.5 billion this year from just $3 billion in 2009 and $1.6 billion in 2008.
While activity is looking up, there is still a long way to go to reach the heights of 2007, when there were 260 IPOs and a total of $10.4 billion in funds raised.
The largest float of 2010 was QR National, which dominated IPO activity by raising $4.1 billion. It was followed by Westfield Retail Trust, which raised $2 billion. These two floats alone accounted for 80 per cent of all funds raised during the year.
Share price performance is also looking up, with almost 60 per cent of all IPOs trading at or above their issue price at the start of December. The simple average share price gain has been boosted to 33 per cent, mostly thanks to strong performances in the resources sector.
Looking to next year, Sydney-based Deloitte corporate finance partner Steve Woosnam said that while the resources floats would continue, IPOs could be an option for many other businesses in 2011.
“Many private equity firms will be looking to sell assets in the coming year following a couple of years where market conditions were not conducive to sales at acceptable values,” he said.
Woosnam also pointed to companies that had deferred floats in 2009 and 2010, such as Valemus, as likely suspects to re-examine market conditions and consider an IPO in the New Year.
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