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IPO outlook for 2018

IPO outlook for 2018

Which new companies are preparing to join the ASX through initial public offerings this year?

More than 30 companies have already applied to list on the Australian Securities Exchange (ASX) in 2018, hoping to raise a total of around $600m in capital by initial public offerings (IPO).

Materials and technology stocks make up the bulk of proposed listings so far this year.

Eagle Mountain Mining, a minerals explorer with a focus on copper and gold, is hoping to raise more than $8m on its proposed listing date1 of 9 March.

Saturn Metals is a gold explorer hoping to raise as much as $7m at its IPO proposed for 15 March and Universal Biosecurity wants to raise $5m from its IPO proposed for 10 April to help it commercially develop its fumigation technology.

Keep in mind that listing dates are proposed only and are subject to change without notice. You can check the ASX website for any updates.

What happened in 2017?

The materials sector recorded the largest number of listings in 2017, with 29 of the total 110 IPOs completed on the ASX, according to research by Marcus Ohm, Corporate and Audit Services partner at accountants and business advisers HLB Mann Judd.

In 2017, those 110 IPOs raised a total $4.1bn, which was significantly down on the $7.5bn raised in 2016, according to HLB Mann Judd's IPO Watch Report 20182.

The biggest differentiator in 2017 was the absence of large companies listing with market capitalisations in excess of $1bn, Ohm said in the report. 

Small cap companies made up the bulk of IPOs on the ASX last year – 88 of the 110 total. The small cap listings came predominately from the materials sector and raised a total $1.1bn, compared with 64 in 2016 that raised $828.5m.

For the purpose of its report, HLB Mann Judd defined a “small cap” company as one with a market capitalisation of no more than $100m, based on the price at which new securities were issued.

New listings significantly outperformed the wider market in 2017 in terms of year-end share price gains.

The average increase in share price was 46% across all new IPOs and 56% in the small cap sector, HLB Mann Judd said in its report. In comparison the ASX 200 had gains of around 7% in the 2017 calendar year.

While 63%, or 69, of all IPOs ended their first day above their listing price in 2017, 44 of the 110 listings ended 2017 in negative territory, and of these, 25 recorded decreases of 25% or more.

Sources

1. Listing dates are proposed or anticipated dates. The ASX advises you should not rely on this information in any way. https://www.asx.com.au/prices/upcoming.htm

2. IPO Watch Report 2018, HLB Mann Judd, released 30 January, 2018. Retrieved from http://www.hlb.com.au/Media-Resource-Centre/Publications/National/IPO-Watch-Australia-2018

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia. The commentary provided from external companies that are not a member of the Commonwealth Bank of Australia Group of Companies (the CBA Group), including, but not limited to HLB Mann Judd, does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. Neither Commonwealth Securities Limited nor members of the CBA Group accept any liability for losses or damage arising from any reliance on external companies and their products, services and material. Listing dates are proposed or anticipated dates. The ASX advises you should not rely on this information in any way. https://www.asx.com.au/prices/upcoming.htm