30/01/2013 - 12:09

Negative outlook for IPOs

30/01/2013 - 12:09

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Negative outlook for IPOs

The upcoming State and Federal elections are adding to the lowest levels of IPO activity seen in years, according to business and financial advisors HLB Mann Judd.

The firm today released its IPO Watch report for emerging companies. It reveals a dismal 2012 in which market sentiment weighed negatively on the appetite for new listings and resulted in a 55 per cent drop in the number of successful IPOs.

About 90 per cent of new listings were small cap companies with the majority based in Western Australia.

HLB Mann Judd partner Norman Neill said the outlook for 2013 did not indicate a significant improvement as uncertainties in both North America and Europe, as well as commodity markets, would continue to weigh uo the potential for new IPOs.

“Both the State and Federal elections may also be weighing on people’s minds as well,” Mr Neill said.

“But it may be that activity increases during the second half of this year when those things are resolved.”

Mr Neill said the firm had noticed a significant downturn in the amount of business it was getting in for IPOs in Western Australia.

“It’s probably the quietest it’s been for a long time; we were sitting here this time last year and we were relatively confident with what was in the pipeline, but we are not having those conversations now.”

Mr Neill said of most concern was the significant drop in the number of small caps reaching their initial subscription rate targets – only 57 per cent met their targets, down from 71 per cent in 2011 and 78 per cent in 2010.

There are currently 11 listings planned Australia wide (down from 26 last year) and only three have indicated a listing date. 

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