The total number of listed entities on the ASX at the end of February 2024 was 2,183, down from 2,289 the same time last year, as markets witnessed a growing appetite for private assets.
The ASX Group Monthly Activity Report for February 2024 has found the number of delistings (10) outpaced the number of new entities admitted (six) last month while the total new capital quoted was $2.5 billion, compared with $1.6 billion in the prior corresponding period.
In the financial year to date as at the end of February 2024, there have been 110 delistings against 75 delistings for the year before.
Moreover, there were only 38 new company entities admitted to the Exchange, compared with 47 during the same period last year.
Weighing in, EQT said the continuing trend of ASX delistings surpassing new market entries signalled “a notable shift towards private markets”.
“Australian investors are strategically pivoting towards private markets in pursuit of diversification and higher returns,” said Martin Donnelly, managing director of client relations at EQT Capital Raising.
He attributed the tilt partly to a desire for simpler ownership structures and enhanced capital fluidity.
“With the public markets contracting, private assets offer fresh opportunities for building resilient portfolios and tapping into substantial value creation beyond the public sphere,” Donnelly said.
He believed private markets are “fast becoming democratised within the Australian market”, adding that many companies have created avenues for wholesale investors, advised clients and even retail investors to buy into these assets.
Donnelly previously highlighted that the US, Europe, and Australia have all witnessed a decline in the number of public companies.
“In the US, for example, the median age of companies at IPO has more than doubled over the past decade, largely due to the prevalence of private equity-backed firms,” he said.
Earlier this year, Drew Schardt, Hamilton Lane vice-chairman and head of investment strategy and direct equity, observed individuals have been steadily enhancing their understanding and confidence in the investable universe and adapting to a “new normal”, particularly as there is more clarity around interest rates.
“It doesn’t mean there won’t continue to be choppiness, but I believe investors are feeling more positive about the current macro-economic environment – certainly, risks from geopolitical and other major events around the world still remain,” Schardt explained.
The sentiment from investors and clients now, he noted, was an increased inclination towards private markets as they look to find ways to turn the dial to “risk-on”.
This was echoed in State Street’s risk appetite index reading, rising from 0.24 in December from zero in November, with long-term investor flows now highlighting a preference for adding risk across asset classes.
