The IPO market was a happy hunting ground for investors in 2017, with the share price of companies that listed on the ASX last year rising by an average of 46 per cent by the end of the year.
A total of $4.1 billion was raised by 110 companies, compared with $7.5 billion raised by 94 companies in 2016.
Investors who were prepared to venture into the small cap sector stood to make even bigger gains. New listings with market caps of less than $100 million finished the year up by an average of 56 per cent.
According to the latest HLB Mann Judd IPO Watch, 2017 was the year of the small cap IPO. Out of a total of 110 listings, 88 were small caps – up from 64 in 2016.
The materials sector led the small cap resurgence, with 28 small cap listings, followed by software and services (10 small caps) and technology hardware and equipment (six listings).
In terms of performance, IPOs in the pharmaceuticals, biotechnology and life sciences sector were up an average of 188 per cent. Technology hardware and software listings rose 167 per cent.
Food and beverage listings were up 109 per cent and diversified financials 86 per cent.
Listings in the investments sector, which included the Magellan Global Trust, were up an average of six per cent.
Listings in the utilities sector lost ground – falling by an average of four per cent.
The top performing stock was Ardea Resources, which listed at 20 cents in February and rose to a high of $1.99 before ending the year at $1.90.
Wattle Health Australia and Cann Group both made gains in excess of 800 per cent.
Of a total of 110 listings, 44 ended the year with their stock price below their issue price.
For investors seeking stag profits, 69 companies recorded first day gains.
Aside from Magellan, there were few large IPOs. Simon James, a corporate advisory partner at HLB Mann Judd Sydney, said one factor contributing to the absence of large listings was the fall in the number of private equity exits.
Archer Capital pulled its plans for the IPO of Craveable Brands, the company behind Red Rooster and Oporto. Quadrant decided not to go ahead with the IPO of Zip Industries and Champ pulled the IPO of Accolade Wines.
Marcus Ohm, a corporate and audit services partner at HLB Mann Judd Perth, said investor sentiment towards IPOs was positive, with 79 per cent of listings meeting or exceeding their targets.
Industries where companies struggled to meet their targets were media, retailing and telecommunications.
In a separate review of IPO activity, Ernst & Young has forecast that the small cap segment will be strong again this year, driven by activity in the materials and technology sectors.