2021: the year of the IPO
About 190 initial public offerings (IPOs) were listed on the Australian Securities Exchange (ASX) in 2021, the highest number of new floats in the last decade and more than the previous two years combined.
Following a strong end to 2020, high levels of IPO activity continued throughout 2021, picking up pace toward the end of the calendar year, according to HLB Mann Judd’s IPO Watch report.
Marcus Ohm, HLB Mann Judd partner and author of the report, said the volume of activity increased by 68% in the second half of the year, bringing total funds raised for the year to $12.33 billion.
“This was a significant increase compared to both the previous year of $4.98 billion, which was impacted in the early part of the year by COVID-19, and the total in 2019 of $6.91 billion,” he said.
“Whilst funds raised were up significantly, the average funds raised were similar to the previous year with new entrants raising $64.54 million on average, reflecting similar mixes of large and small cap companies.”
A total of 145 small caps completed their IPOs – almost double the five-year average.
As a proportion of all listings for the year, small cap listings represented 76% of the total number of new market entrants.
Companies in the materials sector dominated, making up 68% of small cap listings.
“Whilst the strongest-performing industry sector continued to be the materials sector with 107 new market entrants during the year (2020: 24 new listings), this represented only 18% of total funds raised,” Ohm said.
The materials sector was heavily weighted toward gold, copper and lithium.
Six of the 10 lithium listings recorded average gains over 100%, with Global Lithium Resources up by 375% and Lithium Energy Limited up by 365%.
Ohm said there was a healthy spread across industry sectors: software and services had nine IPOs, and pharmaceuticals, biotechnology and life sciences, commercial and professional services, diversified financials and capital goods each had eight new entrants.
IPOs in 2021 experienced a strong share price performance with the average first day share price of new entrants increasing by 20%. Of new listings, 115 companies, or 60% of all IPOs during 2021, ended their first day above their listing price.
The IPO pipeline for Q1 2022 was strong, according to Ohm, with 27 potential listings seeking $250.4 million.
“Of those 27 listings, 17 are materials companies and three quarters of those companies are looking for gold,” he said.
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