IPO Gap to be Filled by Big End of Town - Dealogic
(07 September 2020 – Australia) Australia is catching up to the offshore equity capital markets (ECM) boom, with initial public offerings (IPOs) limited to corporates so far set to be complemented by major institutional enterprises going to market.
As of the end of Q3 2020, there have been 22 IPOs worth a combined US$261 million according to Dealogic. This figure compares unfavourably to ‘normal’ year deal flow with 50 IPOs worth a combined US$1.8 billion recorded in 2019 and 77 IPOs worth US$3.5 billion in 2018.
Investment bankers predict that Australia will ‘close the gap’ to international markets by the end of Q4 2020. Among the larger IPOs expected to list are Macquarie Group's data analytics group Nuix, Brookfield's Dalrymple Bay Coal Terminal, Adore Beauty and Greenlit Brands' Fantastic Furniture. Other larger companies that might IPO include EMR Capital's copper assets.
"I don't think the elevated levels of retail trading will change the way we allocate an IPO book. Maybe at the margin, retail fervour might help to tighten up an IPO book, but at the moment, retail enthusiasm is matched by institutions. And while liquidity in the aftermarket is important, mostly you want to put the stock in safe hands” stated Morgan Stanley's Head of ECM, Bryce Thompson.
“It may even be the start of a new IPO cycle that accelerates into next year. As opposed to 2017, 2018 which felt like the tail end of a cycle, this feels more like the start of a new IPO cycle with really interesting businesses that have been growing through this environment starting to come to market” commented Macquarie Group’s Head of Capital Markets, Hugh Falcon.
"There's been a hiatus in IPOs, leaving aside micro-caps. Now, there's lots of interest in the IPO pipeline from the buy side as it's difficult to find listed stocks that are looking attractive value relative to their fundamental values given how hard the market has bounced back” Mr Falcon added.
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