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IPO deals at its ‘worst’, Baker McKenzie reports
IPO withdrawals has had its “worst-performing year” for ASX, which has dented market confidence but there are predictions for a stronger 2020.
Naomi Neilson
Baker McKenzie released its cross-border IPO index which indicated capital raising has declined 96 per cent year-on-year and listings have dropped by 71 per cent this year, which follows on from five years of decline and poor results.
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Head of equity capital markets Craig Andrade said: “Appetite for Australian IPOs have been dented by a number of high-profile postponements. In October alone there were four major withdrawals. Latitude Financial Group postponed their listing in what was slated to be the largest on the ASX this year.”
When comparing figures to the 49 domestic listings, it raised a total of $4.8 billion. Of these 49 listings, 11 were valued at US$100 million and worth a total of US$2.5 billion. However, the figures also show a decline across both measures year-on-year, capital raising down by 43 per cent and issues down by 25 per cent.
Mr Andrade noted there may be an upside: “It is worth noting that many of these listings have been postponed with potential for a strong pipeline of share sales in 2020. For example, Funlab has puts its IPO on ice but intends to ramp it up.”
When speaking about the Asia-Pacific region, IPO activity has “fallen significantly” and was mostly driven by an uptick in high-value Chinese cross-border deals.
Chinese issuers led the way with 260 IPOs, 179 of which were domestic, followed by South Korea with 92 domestic IPOs. Japan and India followed with 90 and 63 IPOs.
In this region, financials was the leading sector, raising US$16.3 billion. Additionally, capital raised by high technology increased by 12 per cent and retail showed a 64 per cent increase in capital raising year-on-year, due to the Alibaba offering.
In Australia, Mr Andrade highlighted: “It’s important to note that the Australian market has been impacted by the increasing geopolitical uncertainties and trade issues.” This includes the global growth concerns in response to the US-China trade war.
