As Australian companies rebuild from COVID-19, some are seeking to raise capital to mitigate the impact of current conditions, while some seek to acquire assets or finance new operations to continue a trajectory of growth, the report noted. 

Currently, business ambitions are constrained by the broader macroeconomic environment and capital market conditions. Many factors are causing uncertainty and hampering the activity of equity capital markets. 

A primary cause of uncertainty is higher inflation, exacerbated by the reaction from central banks to tighten monetary policy. 

The war in Ukraine has also disrupted global supply chains and energy supplies, and rising interest rates are prompting fears of a recession in the United States, and potentially Australia.

These pressures are impacting company valuations and institutional investor support, the report noted. 

“Despite volatile macroeconomic conditions, successful capital raisings are still taking place in the market — though for many, the tactics and approaches have changed since this time last year,” said MinterEllison partner Daniel Scotti. 

Three key takeouts from the roundtable discussion were distilled:

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1. Volatile macroeconomic conditions have caused equity capital markets to cool;
   • Growth stocks have been hit hardest; 
   • The markets are looking for companies to conserve cash, manage the impact of inflation and remain (or become) profitable;
     
2. Capital raisings remain possible;
   • For distressed companies, existing shareholders may participate in raisings to protect their investment;
   • Raisings to fund accretive merger and acquisition continue to garner shareholder support;
   • Companies can look to private markets for funds, and dual-track IPOs can provide pricing tension;
3. Falls in activity are overstated as 2021 was a record year;
   • Sentiment can change quickly (as it did after the initial COVID-19 downturn);
   • It will be important to ensure that regulatory settings in Australia remain supportive of capital raisings.

“However, organisations could use this period productively to work on maintaining their ‘investor readiness’ through regular dialogue with potential investors and financial advisors,” he added. 

The roundtable speakers noted that while fundraising had become more difficult, it was a reflection of the cyclicality of markets and prevailing macroeconomic conditions.

The speakers expressed longer-term confidence in the Australian market’s distinctive ability to rebound. 

The speakers included Blair Beaton, acting group executive for listings and chief strategy officer of ASX; Anthony Brown, chief executive of NobleOak Life; Stuart Dettman, managing director at Rothschild & Co; and Amelia Hill, managing director at MA Moelis.

They were joined by Bing Jiang, partner at Next Capital; Calvin Kwok, general counsel at Pinnacle Investment Management; Will Lawrence, director at Wilsons; Andrew Lockhart, managing director at Metrics Credit Partners; Michael Ryan, managing director at Brookfield Asset Management; and Greg West, non-executive director at IDP Education.