The number of initial public offerings (IPOs) in Australia “reduced to a trickle” during the first half of 2023, according to a new report by HLB Mann Judd, with a total of only 14 new listings.
This was down from the first half of 2022, when 59 new listings were recorded, as well as the second half of 2022, when the number of new listings was already low at 28.
The HLB Mann Judd IPO Watch Australia Mid-Year Report indicated that six of the 14 listings during the first half were in January, with a further three in February and March. This meant that there were just five new listings over the entire second quarter.
“The first half of 2023 has been one of the quietest six-month periods for IPOs since the late-2000s – lower even than during the global financial crisis or the height of the COVID-19 pandemic,” said report author and partner at HLB Mann Judd Perth, Marcus Ohm.
“The lack of activity reflects the persistently difficult environment for IPOs that emerged towards the end of 2022, when there was a noticeable slowdown in IPO activity in the second half of the year.”
Given the low number of new listings, HLB Mann Judd noted that there was also a significant decline in the overall amount raised during the first half of the year.
A total of $150 million was reported to have been raised, well below the $790 million raised in the same period a year earlier and the $2.9 billion raised in the first half of 2021.
The new listings of the first six months of 2023 included 12 small caps, which raised $8.3 million each on average, up from an average of $7.6 million during the first half of 2022.
Meanwhile, the two large cap listings in the first half raised a combined total of $50 million, down from $384.4 million raised across five listings.
In terms of subscription levels, Mr Ohm pointed out that all but one of the companies which had completed their IPOs at the midpoint of 2023 achieved their full target amounts, with a success rate of 92 per cent versus 73 per cent at the same point in 2022.
Mr Ohm also warned that the local IPO market looks difficult heading into the second half due to a combination of unfavourable macroeconomic factors and poor investment sentiment.
“Overall, we expect the remainder of 2023 to be challenging for the IPO market, with tight capital markets,” he said.
“The degree of uncertainty across global markets, weaker indicators and a slowdown in the world economy, are all impacting the IPO market. That said, we expect a level of improvement in the second half of the year and into 2024.”
At present, Mr Ohm said that the pipeline for IPOs appears to be limited, but with the potential for larger floats to come to market sometime later in the year.
According to HLB Mann Judd, there were only 11 potential upcoming floats on the ASX as of the end of June, which were seeking to raise a total of $693 million.
