Australia’s pipeline of initial public offerings (IPOs) is expected to ramp up in the new year thanks to a cyclical market on the rebound.
Anticipated listings for the second half of 2024 include companies in sectors such as industrials, mining, and consumer discretionary, spanning areas like cars, household appliances, specialty items, luxury goods, and leisure.
According to the Australian Securities Exchange (ASX), this new activity signals a change after an extended quiet period since 2021, influenced by economic uncertainties surrounding inflation and interest rates that impacted listings globally and caused the delay of some highly-anticipated IPOs.
Australian investment firm Perennial Partners highlighted a takeover trend in the market, noting that takeovers had accounted for a large portion of delisted value in recent years. However, a substantial amount of recycled capital had also been reinvested back into the ASX during the same period.
Perennial portfolio manager Karen Chan mentioned that the recent low point in IPO activity was further compounded by increased takeovers due to attractive valuations, especially among smaller companies. She noted the growing confidence from boards and management in pursuing deals, driven by factors such as stabilizing interest rates and the appeal of Australian targets to foreign bidders.
With expectations of a rebound in IPOs, Chan stated that the IPO window is cracking open again following a relatively quiet period. While takeovers had dominated the delisting landscape, she anticipated a reversal of this trend as economic conditions improved.
Despite reduced listing numbers over the past decade, the ASX remains an active and liquid exchange, with a significant amount of daily trading activity. The exchange saw 45 new companies joining its boards in 2023, indicating ongoing interest in public offerings and investments.
As the market gears up for a potential surge in IPOs later in 2024, stakeholders are keeping a close watch on developments in various sectors, anticipating renewed activity and opportunities in the evolving landscape of the Australian market.
