Strong pipeline of IPOs expected as economy bounces back
With a diverse range of companies already applying to list on the ASX this year, the pipeline of initial public offerings is looking strong for 2021, according to HLB Mann Judd.
A report on initial public offerings (IPOs) released by advisory and accounting firm HLB Mann Judd shows that despite the economic impact of COVID-19, the Australian IPO market rebounded strongly in the second half of 2020 with a resurgence in market listings.
The report analysed IPO activity over the past 12 months on a number of key metrics, including listing volumes, share price performance, industry spread and overall trends as well as a review of the pipeline for 2021.
There were 74 new listings on the ASX in 2020, which is an increase of 12 on the year prior. Notably, the second half of 2020 recorded 84 per cent of the year’s total listings.
HLB Mann Judd Perth partner Marcus Ohm said while the March and June quarters of 2020 saw historically low volumes with only 12 companies listing, there were signs of improvement by the September quarter, while the December quarter experienced a resurgence in activity, with volumes and funds being the highest in a single quarter since 2010.
Looking ahead to 2021, the report stated that the pipeline of IPOs for early 2021 already looks strong.
According to the report, there are 14 companies that have applied for listing to the ASX, being a small increase from the 13 that had applied at this time last year and similar with 2018.
“These companies are seeking a total of $172 million, which is a substantial increase on the $111 million sought at the same time last year,” Mr Ohm said.
“It is telling that in a post-COVID-19 recovery environment, the pipeline is quite good compared to previous years, and this reflects the strength of Australia’s economic fundamentals and positive investor sentiment.”
The report noted there is a lot of diversity in the proposed IPOs at year-end, with nine different sectors represented compared to five for the previous year.
“The materials sector is the largest contributor to the proposed listings, with a total of four listings. All of the proposed materials listings relate to gold projects, reflecting the strength of the gold price,” Mr Ohm said.
“Another sector with multiple applications in the pipeline is the software and services sector, with three applications. Technology hardware and equipment stock listings remain subdued, with only two applications at year-end seeking $20 million in total funds.”