IPO market hit by broader market downturn

IPO HLB Mann Judd

21 July 2022
| By Liam Cormican |
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The initial public offering (IPO) market has shrunk in the last few months, bucking the trend of high listings that the market has seen in the previous 18 months.

This is according to the HLB Mann Judd IPO Watch Australia Mid-Year Report, which analysed IPO activity over the first six months of the year on a number of key metrics, including listing volumes, share price performance, subscription rates and sector spread.

To date, IPOs in 2022 had raised just $790 million compared to $2.9 billion in the first six months of 2021.  Overall, a total of $12.33 billion was raised in 2021.

Marcus Ohm, author of the report and partner at HLB Mann Judd Perth, said the IPO slowdown in the second quarter of 2022 reflected factors such as inflationary fears, geopolitical instability and interest rate rises affecting markets worldwide.

“We expect that macroeconomic and capital market conditions will continue to impact the IPO market in the second half of 2022.  The pipeline at the end of June 2022 reflects uncertain market conditions with only 15 floats preparing to list, for a total of $121 million,” he said.

This contrasted to 43 proposed listings at the end of June 2021 which sought to raise a combined $1.25 billion.

The report showed there had been 59 new listings in the first six months of 2022 compared to 61 in the same period in 2021, and 130 in the second half of 2021. 

“While we usually see more listings in the second half of the year than the first half, at this stage it seems unlikely that the IPO market in 2022 will come anywhere near the amounts raised, or number of listings, that we saw last year,” Ohm said.

Average amounts raised by small caps had also dropped, from $9.6 million in the first half of 2021 down to $7.5 million in the first half of this year, reflecting the tougher market conditions in 2022.

Materials was the dominant sector during the period, representing a total of 44 out of 59 new entrants. Gold projects continued to prevail, with 21 of the Materials listings holding gold projects. In addition, multiple listings held projects with a focus on lithium, nickel and cobalt prospects, reflecting the increasing global demand for battery metals. 

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