The annual HLB Mann Judd analysis of the Australian initial public offerings shows that while the number of IPOs fell last year, those that made it to the market performed better. This tells us a bit about the current state of our sharemarket.
According to Marcus Ohm, the Perth-based HLB Mann Judd partner who authored the report, as he has done for several years, notwithstanding a decline in the number of IPOs last year, and the total funds raised by them, there was an increase in the average funds raised per IPO and also an improvement in the subscription rates. The figures tend to indicate continued bullish sentiment among retail investors, notwithstanding the fully priced state of the sharemarket in general.
Ohm said last week that there were only 62 new listings last year, down from the 93 in 2018. This was also down from the average of 96 listings per year between 2015 and 2018. The peak number of listings was 110 in 2017, the highest number since the last peak in the market in 2007.
The figures show a drop also in funds raised, because there were no very big listings – $6.91 billion compared with $8.44 billion in 2018. But, interestingly, Ohm said: “Despite the drop in the number of IPOs and the total funds raised, there was an increase in the average amount raised and also an improvement in subscription rates… The average amount raised in 2019 was $112 million, up from $91 million in 2018. This partly reflects the fac that there were fewer small-cap listings over the past 12 months.”
In terms of subscription targets – funds sought in the IPO – 84 per cent of companies listing achieved their target last year, compared with 72 per cent the previous year.
“Large caps in particular performed well,” Ohm said. “There were 29 of the 34 large-cap companies obtaining or exceeding their subscription targets. The $10 million- $25 million bracket was the worst performing.”