Standout year for IPOS and M&A

M&A IPO ASX Pitcher Partners

18 February 2022
| By Liam Cormican |
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Last year was a standout year for merger and acquisition (M&A) activity and initial public offerings (IPOs), with 240 new listings on the Australian Securities Exchange (ASX) - the biggest year since the height of the mining boom.

By volume of listings, the ASX outperformed nearly all exchanges globally, just behind those in the world’s two largest economies: the US and China, according to ASX general manager, James Posnett.

“ASX IPOs raised over $13 billion in capital, the highest in seven years. The value of new listings, including IPOs, spin-offs, dual and direct listings, was $52 billion – another record,” he said.

“The average price performance of ASX IPOs was 17%, outperforming the broader S&P/ASX 200 index, which ended 2021 up 13%.”

Posnett said record high M&A activity, share buybacks and special dividends had helped to increase demand for IPOS as cash was returned to investors and then redeployed.

According to a recent report by Pitcher Partners, the M&A boom in Australia showed no signs of slowing down with opportunities forecast to run rampant for another 12-24 months.

In 2021, Australian M&A volumes took a slight dip, sinking to 927 deals, but completion values exploded to $305 billion, marking a 225% increase from 2020.

Canvassing the opinions of 60 M&A dealmakers who had completed at least one deal in Australia in the past 12 months, Pitcher Partners took a forward look toward M&A activity, finding that current Australian M&A conditions were ranked as eight out of 10.

About four in five deal makers believed Australia’s mid-market deals were superior to those in other markets while almost all were looking for M&A opportunities in Australia and would continue to source deals over 2022.

As far as IPOs went, Posnett said the pipeline for 2022 remained strong.

“Mining explorers make up the largest portion by number, with the remaining companies in a broad range of sectors including technology, consumer, financials, and healthcare,” Posnett said.

“Over the coming months, global markets will continue to deal with several key risks, including those relating to inflation, central bank policy, geopolitics and the pandemic,” he said.

“Nevertheless, valuations and market liquidity remain relatively high. Provided market volatility stays at reasonable levels, IPOs will continue to flow.”

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