A strong year for Australian IPOs after initial market shock

2021 IPO Watch Australia summary of findings

29 January 2021

Despite the widespread economic impact of COVID-19, the Australian IPO market rebounded strongly in the second half of 2020 with a resurgence in market listings. This was one of the key findings from HLB Mann Judd’s annual IPO Watch Australia Report.

The report analyses IPO activity over the past 12 months on a number of key metrics, including listing volumes, share price performance, industry spread and overall trends, as well as a review of the pipeline for 2021.

In 2020, there were 74 new listings on the Australian Stock Exchange (ASX), which was an increase of 12 on the year prior. Most interestingly, 62 of the 74 listings occurred in the second half of the year. The strong end to 2020 reflects the resilience of Australia’s economy amid particularly tough business conditions.

In early 2020, the Australian Federal Government adopted a mass suppression strategy to minimise the impact of the COVID-19 virus. The country’s geographic isolation, combined with a AUD17.6 billion economic support package, strict quarantine system and high test rates per capita, has resulted in comparatively low infection and death rates. Australia is in a strong position as the country prepares to roll out its vaccination program from February 2021.

However, in the first half of 2020, Australia was not immune to the unique set of circumstances and significant market volatility which saw historically low volumes of listings. In the first half of 2020 only 12 companies listed on the ASX. However, by September, there were signs of improvement, which was arguably reflected in Australia’s broader economic position. The December quarter then experienced a resurgence in activity with volumes and funds raised being the highest in a single quarter since 2010.

Australia’s listing volumes trended alongside the global activity which saw some of the highest IPO capital raising activity in the last decade, particularly from the US and China domestic markets. In the US there were several high profile listings including Airbnb, Palantir, Snowflake and DoorDash.

While many businesses and markets globally have been impacted by the pandemic, some sectors flourished during the year. Companies in the e-commerce, technology, pharmaceuticals, food delivery and technology services sectors performed well upon listing.

In Australia, listings from the retailing sector accounted for 13 per cent of total funds raised across IPOs in 2020, well up its contribution in previous years. Australian consumer activity also mirrored the global shift to online shopping as consumers avoided bricks and mortar retail outlets during the crisis.

Other notable ASX listings during the year from businesses that experienced growth during the pandemic included Youfoodz Holdings Limited (ASX:YFZ), a producer of ready-made meals and Aussie Broadband Limited (ASX:ABB), an internet provider, which have achieved post listing valuations above company expectations.

Despite uncertainty in the global markets, with several macro-environment trends at play, a number of high profile companies have reported their intention to capitalise on the IPO boom.

Australia’s strong end to the year also looks set to continue throughout 2021, with a healthy pipeline of new market entrants scheduled to list. At the end of 2020, 14 companies had applied for listing, representing a small increase on the comparable period last year.

About IPO Watch Australia

HLB’s IPO Watch Australia is authored by Marcus Ohm, a Corporate and Audit Services Partner based in Perth. The report provides a detailed summary of IPO activity within Australia for the year and analysis on key aspects of the market including:

  • Share price performance
  • Sector analysis
  • IPO subscription rates
  • Review of activity by quarter
  • The road ahead for the year
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