New share market listings rebound from Covid slump

The ASX currently has a pipeline of more than $700m in new listings, following a jump in the six months to June, says an IPO report.

While the number of listings has rebounded, the performance of new listings in th first half of the year was more subdued than the broader market. Picture: Bloomberg

The Australian market for new share market listings has continued its rebound from last year’s Covid slump, with almost $3 billion raised in new listings on the ASX in the first half of year.

This more than 20 times the $132 million raised in the first half of last year, according to a new report by accounting firm HLB Mann Judd.

The report, released on Wednesday, says the strong pipeline of listings in the first half of this calendar year – with 61 new market entrants compared with only 12 for the first six months of last year and 74 listings for the whole of 2020 – was a reflection of favourable macroeconomic and capital market conditions as well as “strong investor sentiment.”

“The increase in total funds raised was driven by 13 large cap IPOs coming to the market so far in 2021, compared to only one in the first half of 2020,” said HLB Mann Judd partner Marcus Ohm, the author of the report.

Major listings in the first half included Airtasker and Pepper Money.

The report estimates that the ASX currently has a pipeline of more than $700m in new stock market listings, following the $528m listing earlier this month of copper miner 29Metals.

In its latest IPO watch report, the firm says there were 42 proposed ASX listings as of the end of June which planned to raise more than $1.25bn, compared to only a single listing proposed at the end of June last year and seven at the end of June 2019.

The largest of these was the float of 29Metals, which closed on July 2, raising around $528m.

The report says exploration and mining companies are the strongest contributors to the proposed listings as of June, with 27 listings looking to raise more than $700m, including 29Metals.

These included 15 gold companies and seven copper projects.

“There continues to be a wide range of companies planned to list with nine industry sectors represented,” it says.

The report shows the IPO market in Australia this year has continued to be very strong, despite the prolonged Covid-19 pandemic.

The June quarter had the highest number of listings for the year with some 39 of the total of 61 listings for the first half taking place in the last few months of the financial year.

The report says the small cap sector in the first half of this year was particularly strong, with 48 new entrants raising a total of $462m, compared to only 11 listings for the first six months of last year.

The main contributor to this was the materials sector, which had 26 new small cap listings compared to only three in the first six months of last year.

The average first day gain for the IPOs over the listing price was 21 per cent in the first half compared to 19 per cent for those which listed in the first half last year.

But new listing performance to the end of June this year was more subdued than the broader market.

By June this year new listings saw prices fall away after the first day, with a total gain since listing at only six per cent by the end of June, compared to an All Ordinaries gain of 11 per cent over the six month period.

It was also more subdued than the 16 per cent gain in the share price of new listings by June last year.

The best performing large cap in the first half of this year was Airtasker, which recorded a first day gain of 62 per cent, with its price up by 69 per cent by the end of June.

Pepper Money was the largest listing during the first six months of the year, raising some $500m.

“Despite this there were many strong individual performers with 26 per cent of new listings recording a gain of 20 per cent or more by the end of June,” Mr Ohm said.