29/01/2014 - 14:58

Large caps dominate IPO market

29/01/2014 - 14:58

Bookmark

Save articles for future reference.

Large companies dominated the initial public offering market in 2013, with 96 per cent of all funds raised coming from companies with a market capitalisation of more than $100 million.

Large companies dominated the initial public offering market in 2013, with 96 per cent of all funds raised coming from companies with a market capitalisation of more than $100 million.

A new report from HLB Mann Judd has found the total amount raised from new listings on the ASX in 2013 was more than $8.5 billion, a significant increase on the $2.3 billion average of the past five years.

However small cap companies played a much smaller part in the IPO market than in recent years, representing 61 per cent of new entrants compared with 93 per cent the previous year.

"While small cap resources companies have dominated the IPO statistics in recent years, this was not the case in 2013," HLB Perth partner Marcus Ohm said.

"A combination of falling commodity prices and reduced investor sentiment appear to have had a negative impact on resources IPOs during 2013."

In total, 49 companies listed on the ASX in 2013, up from 46 listings in 2012.

Resources companies accounted for just 35 per cent of all new listings, a significant change from 2012 where 83 per cent of the IPO market was from the energy and minerals sectors.

The industry sectors of consumer services and pharmaceuticals, biotechnology and life sciences were the best performers, averaging 34 per cent and 27 per cent year-end gains respectively.

Just four companies with market caps of less than $10 million, which has historically been a market position occupied by junior exploration companies, successfully concluded listings during 2013.

In a more positive sign, the average amount raised by small cap companies more than doubled to $12 million from $5.3 million in 2012.

Mr Ohm said the IPO pipeline for 2014 was extremely thin, with only five planned listings compared with 14 at the start of 2013 and 26 at the beginning of 2012.

Despite this, he said it was difficult to assess whether activity would increase this year.

There were just five WA IPOs in 2013, collectively valued at $48.2 million, according to research by Deloitte.

Just 12 months earlier, new market entrants in WA raised $227 million.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options