IPO Wrap: 2024 outlook for IPOs, and which stocks could list on ASX soon
Earnst & Young expects IPOs to pick up in 2023. Meanwhile, here’s a health check on this year’s entrants and some impending arrivals.
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It certainly hasn’t been a bumper year for IPOs – either in Australia or globally.
Global IPO market volumes have fallen by 8 per cent and proceeds down by 33 per cent compared with 2022, according to a report from Earnst &Young.
Despite the strong equity market rally this year (S&P 500 up 24 per cent and ASX200 up 7 per cent), IPOs have remained muted in many developed markets.
September was an exception, with a flurry of top names such as ARM Holdings, Instacart, and Klaviyo going public.
E&Y believes that in 2024, enthusiasm for IPOs will be high, and smaller deals will emerge as market sentiment improves.
The consulting company, however, adds that potential candidates should monitor the macro situation carefully.
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“Before monetary policy eases and geopolitical climate stabilises, IPO candidates should keep their eyes on building fundamentals and managing price expectations to capitalise on the fleeting windows as 2024 progresses,” said E&Y.
Globally, E&Y believes moderating inflation and potential 2024 interest rate cuts could attract investors back to IPOs.
“However, sustained geopolitical instability may undermine confidence,” it said.
“Broadly, the year ahead hinges on an improving macroeconomic backdrop for IPO revival, as companies eagerly await more favourable market conditions to widen IPO windows.”
IPO candidates looking to go public in 2024 will also need to be well-prepared.
“Key factors to consider are: inflation and interest rates, government policies and regulations, recovery of economic activities, geopolitical tensions and conflicts, ESG agenda, and global supply chain,” said E&Y.
Health tech company, Enlitic Inc (ASX:ENL), made its ASX debut on Tuesday, closing at 85c versus its IPO price of 83c.
At 11am Wednesday (AEDT) it had slipped nearly 6 per cent for the day, with its share price at 80c.
Enlitic harnesses AI to manage medical imaging data in radiology, such as MRI, CT, X-ray and ultrasound images.
The Enlitic platform standardises, protects, and analyses data to create a database that the company says improves clinical workflows, increases efficiencies, and expands capacity.
Enlitic says it owns the industry’s first localised real-world medical imaging database that unlocks the value of historical diagnostic images, aligned with real-time diagnostics, and linkage to real-world data across any critical care solutions.
Health care providers using the Enlitic platform would have their productivity increased, and have their costs decreased, says the company.
Gold lives up to its name
The best IPO this year was Gold Hydrogen (ASX:GHY), with a share price jump of more than 90 per cent.
The stock has been rising since early November after the company announced that significant concentrations of hydrogen and helium had been encountered in sections of the Ramsay 1 well, demonstrating an active hydrogen system in the Ramsay Project area.
In early December, Gold Hydrogen reported that Ramsay 2 well exploration had been completed, and that high helium concentrations had been found, reaching up to 6.8 per cent in raw gas from the Kulpara Formation.
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Despite being only the second well in the company’s exploration program, multiple data points throughout the drilling campaign indicate the potential for a significant helium reservoir and a prolific helium system at the Ramsay project site.
The company expects subsequent exploration, analysis and future flow testing to provide a clearer picture of this promising opportunity.
US-based lithium explorer Chariot Corp (ASX:CC9) has also been rising since announcing in early November that a drill rig has arrived at its flagship Black Mountain Project in Wyoming, US, ready for drilling.
Drilling operations are ongoing, with the first round of assay results expected in January 2024.
The Phase 1 drill program was designed to test the central portion of the Black Mountain pegmatite dike swarm, comprising a 1000m long by +100m wide zone of LCT pegmatite sub-crop and outcrop.
Upcoming ASX IPO listings
All dates are sourced from the ASX website. They could change without notice.
BRAZILIAN RARE EARTHs (ASX:BRE)
Expected listing: December 21
IPO: $50 million at $1.47 a share
Brazilian Rare Earths owns and operates a district scale Tier 1 Rare Earths Province, located in the state of Bahia, North Eastern Brazil.
The company believes its resource – comparable to the world’s biggest non-Chinese rare earth clay project at Serra Verde – will potentially translate into multi-billion-tonnes.
The flagship 510Mt Rocha de Rocha rare earths project represents one of the most exciting critical minerals discoveries globally. Grades of more than 40 per cent TREO have been found, with mineralisation at or near surface.
The project is also accessible by sealed roads, has access to clean hydropower via existing high-voltage power lines, and is located
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ARCADIUM LITHIUM (ASX:LTM)
Expected listing: December 22
IPO: Non-IPO. Merger between Allkem and Livent
In May, lithium giant Allkem (ASX:AKE) and US-based Livent announced an agreement to combine in an all-stock merger of equals to create a global integrated lithium chemicals producer.
The merger has won support from Livent’s big US pension fund shareholder and Allkem’s shareholders.
The merged company will be rebadged as Arcadium Lithium, and run by Livent CEO Paul Graves.
The company will also be 56-44 split between the holders of Allkem and Livent, with plans to become the world’s third-largest lithium producer by 2028, behind Albemarle and SQM.
Its global portfolio, which will include Mt Cattlin, the Olaroz, El Fenix, Sal de Vida and Cauchari brines in Argentina, James Bay and Whabouchi hard rock mines in Quebec and Naraha lithium hydroxide plant in Japan, will eventually produce 248,000t of lithium carbonate equivalent tonnes a year.
Read more about LTM here: Allkem flags growth over dividends ahead of Livent merger
KALI METALS (ASX:KM1)
Expected listing: January 4 2024
IPO: $15 million at $0.25 a share
Kali Metals was established from the spin-out of a portfolio of lithium assets owned by ASX-listed Kalamazoo Resources (ASX:KZR), with assets in the Lachlan Fold Belt.
The belt is best known for its copper, gold and silver production but has also become a focus of lithium explorers, with juniors hoping to repeat the success of their west coast counterparts in WA.
Two of those projects have been sitting in the portfolio of Kalamazoo – the Jingellic and Tallangatta.
Both have now been turned into a new company called Kali Metals, along with KZR’s DOM’s Hill and Marble Bar projects in the Pilbara and the lithium rights at Karora Resources’ Higginsville tenement package in WA.
KZR will own 55 per cent of the entity, which will see Graeme Sloan as MD and Luke Reinehr as chairman.
*Note: there was a 5:1 stock split for ACE
This content first appeared on stockhead.com.au
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Originally published as IPO Wrap: 2024 outlook for IPOs, and which stocks could list on ASX soon
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