“There’s also significant friction with going public in terms of the cost, timeline and the distraction associated with being listed.”

Mr Hershan said Australian investors are crying out for a wider variety of investible IPOs to participate in, attributing the dearth of floats to a “lack of quality deals at reasonable prices”.

The only major IPO this year was burrito chain Guzman y Gomez, which raised $335 million at a $2.2 billion valuation offering new shares at $22 apiece – but only to select institutional investors. Retail investors who wanted Guzman y Gomez stock had to buy it on-market.

The company’s market capitalisation has since swelled to $4 billion, or $37 a share at Thursday’s prices.

Guzman y Gomez’s success is not enough to overcome the disappointing performance of companies that floated during the IPO boom of 2021, many of which are still haunting fund managers’ three-year track records.

“That was a poor vintage, and a lot of very low-quality companies went public at high prices and disappointed,” Mr Hershan said. “So investors are still pretty discerning about the quality of what goes public and making sure valuations are reasonable.”

The ASX highlights that Australia isn’t the only IPO market struggling; the US, United Kingdom and Canada are also experiencing low listing numbers since peaking in 2021.

ASX group executive of listings Blair Beaton said activity is picking up with a range of sizeable floats expected before the end of this year. The exchange is looking at ways to make the listing process more efficient.

“It’s something we continually look at – are there things we can do to decrease timeframes and make it more streamlined,” Mr Beaton said. “But we still think we’ve got some pretty good settings here.”

Professional services group HLB Mann Judd continues to forecast a “high level of caution” among businesses considering an IPO or simple consolidation via mergers or acquisitions. Such volumes typically improve at the end of the calendar year, it said.

“There are many entities and investors currently doing their due diligence to ensure they are prepared for the right conditions that will improve the success of an IPO,” said partner Nicholas Guest.

Improving pipeline

There are seven companies scheduled to float on the local bourse this month, according to the ASX which, if realised, would represent nearly half the number of listings so far this year.

One candidate is Regal-backed lithium play CleanTech Lithium, which has already pushed back its listing date twice and is now scheduled to float on October 25. It would be the company’s secondary listing, as it already has a presence on the London Stock Exchange’s junior AIM market.

CleanTech is hoping to tap into the Australian market’s thirst for lithium exposure as the company progresses towards production at its flagship Laguna Verde project in Chile.

Its executive chairman Steve Kesler told the Financial Review that the IPO was delayed as the company addresses “procedural matters raised by the ASX”.

“We aim to be trading on the ASX in the fourth quarter and will update the market soon once a revised timeline is agreed,” Mr Kesler said.