According to the latest ASX Group Monthly Activity Report, withdrawals from the ASX totaled 156 by the end of June, marking an increase from 119 delistings in the same period last year.
The report also noted a decrease in the total number of entities listed on the Australian stock exchange, which fell to 2,155 as of June’s end, down from 2,255 a year earlier.
Moreover, 56 new companies were admitted to the exchange throughout the 2024 financial year, compared to a slightly higher 57 in 2023.
The size of the ASX has been a subject of ongoing debate, with many attributing its contraction to growing investor interest in private markets.
According to EY, an estimated US$24.4 trillion of capital is now invested in private markets, a figure expected to continue rising despite recent economic headwinds.
Commenting on the ASX’s apparent contraction alongside an expansion in private markets, Martin Donnelly, managing director of Client Relations at EQT Capital Raising, said: “Investors are increasingly pivoting towards private markets as they seek both diversification within their portfolios and higher returns”.
“With more companies going private, the opportunity set for investors is continuing to increase, providing opportunities across a broad range of sectors including infrastructure and healthcare,” Donnelly said.
He noted that this trend is not isolated to Australia, with key global exchanges also witnessing a similar pattern of increased delistings and a shift towards private markets.
“We are seeing a marked shift in capital flows towards private markets across the globe. This is driven by a combination of higher returns, portfolio diversification, and the flexibility that private markets offer to companies,” he said.
“For example, in the US, the number of listings has dropped from just over 8,000 in 1996 to around 4,000 today, with valuations now concentrated in the mega-cap space. As a result, global exchanges are witnessing a decline in listed entities, mirroring the trends seen in Australia.”
In late June, the ASX’s listing manager said she is confident that following a quieter period, the cyclical nature of IPO activity is gearing up for a resurgence in the second half of this year, with momentum expected to continue into 2025.
In a piece published on the ASX, Kate Galpin said: “After an extremely busy 2021, it has been relatively quiet over the past couple of years, similar to 2011–12, but the IPO market is cyclical, and activity will return”.
“Headwinds caused by uncertainty around inflation and increasing interest rates played a role in reducing the number of new listings globally last year, and ASX was no exception with some highly anticipated IPOs deferred,” Galpin said.
She refused to say that the ASX has been shrinking, noting that, “notwithstanding that it’s been a quiet period”, an analysis of capital activity on ASX shows that there has been an increase in net capitalisation every year from 2017 to 2023.
The latest data underscores this trend, with total net new capital quoted on the ASX reaching $5.3 billion, marking a 67 per cent increase compared to the previous corresponding period. On a year-to-date basis through June, total net new capital quoted surged to $27.8 billion, reflecting a substantial 95 per cent rise.
