Commenting on why 2022 is predicted to be a big year, partner Nicole Pedler explained that the last 12 months were filled with record-breaking numbers of IPOs coming to market, on top of the amount of capital raised and the aggregate market capitalisation of IPO companies. The total capital more doubled that of 2020.

“After a challenging 2020, issuers demonstrated confidence and a greater ability to navigate the ongoing uncertainties of the COVID-19 pandemic. The increase in capital raised in 2021 was primarily driven by the higher number of IPOs, suggesting leftover volume from 2020 played a part in driving some of this success,” she said.

HSF covers the key IPO themes, activity and regulatory developments from across the Australian market over the last year in its new report, Australian IPO Review 2021: New Heights, and predicts the trends expected in 2022.

Partner and joint global head of capital markets Philippa Stone clarified that the 2022 capital markets would continue to be a very busy year – driven by a robust IPO market and capital raising driven by record M&A levels – “unless deteriorating global economic and strategic conditions overtake us” over the next 12 months.

“There is a pipeline of issuers preparing to undertake IPOs following the full slate of second half listings in 2021,” Ms Stone said. “Of course, markets can change in an instant and participants are keenly monitoring current events in eastern Europe.”

For IPOs in 2022, partner and co-head of the Australian equity capital markets Michael Ziegelaar suggested that issuers look to beat the last quarter rush and investor fatigue. He said more than 60 per cent of 2021’s IPO occurred in the second half of the year and 33 per cent of those took place in the December quarter.

“In the last quarter, we saw a number of IPOs withdrawn and/or repriced with investor fatigue impacting market outcomes. This will be a real advantage to IPO candidates if they can avoid the crowded end-of-year rush this year,” he said.

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“Another significant benefit of avoiding the end-of-year rush will be the ability to work more productively with the ASX listing team. The ability to run a smooth IPO process and meet the timetable is enhanced by managing the listing process with the ASX proactively and with sufficient time for it to be able to perform its role.”

On the issue of COVID-19 and its impact on the markets, HSF found regulators and investors alike are seeing increased IPO disclosure to adjust to the “new normal”.

Partner Philip Hart explained the trend would continue towards regulators and investors who are seeking more “sophisticated disclosure” from IPO candidates about the potential impacts of the ongoing COVID-19 pandemic on the business.

“While there will always be a level of uncertainty associated with the future, clear communication of the potential financial and operational impacts from the ongoing fallout of COVID-19 and its variants will be expected,” Mr Hart commented.

Mr Hart added that ASIC has also said it will focus on prospectus disclosure in relation to climate change impacts, plans to reach net zero and other ESG factors in the context of the potential for such disclosures to be misleading or deceptive conduct “where there are no reasonable grounds for the promoted outcomes”.

“We expect investors, in particular larger institutional investors and superannuation investors, will also pay close attention to this type of disclosure. Combined with the continued regulator focus on forward looking statements, the importance of IPO candidates staying alert in this fast-developing area, and providing detailed information about their approaches to these issues, cannot be ignored,” he said.

The report also found that pre-IPO rounds will remain an important part. Partner Tim McEwen said the rounds provide IPO candidates with the opportunity to continue to grow and operate their business before an IPO and provide investors with an opportunity to develop their relationship with the company.

“We have seen that pre-IPO capital raisings continue to be popular with early-stage, pre-profit tech businesses looking for a longer runaway ahead of their ASX listing. With technology and the companies that develop and bring it to market showing no sign of slowing down, we anticipate that the ASX will continue to see large numbers of tech companies listing in the coming years,” Mr McEwen said.

“However, issuers should consider whether they are sufficiently mature to list on the ASX, or whether an additional pre-IPO raise may be best.”