Initial Public Offering activity in Western Australia accounted for nearly 15 per cent of all Australian float activity for 2005, according to a report released today.
Initial Public Offering activity in Western Australia accounted for nearly 15 per cent of all Australian float activity for 2005, with almost half the capital raised done by Automotive Holdings Group Ltd and Australian Renewable Fuels Ltd, according to a report released today.
Below are comments on the activity of WA IPO's:
IPO activity in Western Australia has remained relatively consistent with the previous year, accounting for nearly 15 per cent of all Australian float activity during the calendar 12 month period to 31 December 2005.
PricewaterhouseCoopers' Annual Sharemarket Float Report, released today, shows a national total of 94 listings in calendar 2005 raising a near 10 year record of $12 billion. Of these listings, 14 were West Australian companies which raised a total of approximately $150 million and had a combined market capitalisation on listing of $560 million.
While representing only 14 per cent by number, almost half of the capital raised by WA floats in 2005 was done by two companies: Automotive Holdings Group (AHG) and Australian Renewable Fuels (ARF).
Collectively, these two listings also had a market capitalisation on listing similar to the combined total of the other 12 floats.
AHG raised $45 million and had a market capitalisation on listing of $160 million while ARF raised $20 million with a market capitalisation of just over $100 million. Nationally, approximately one third of all listings by number where by companies the size of these or larger.
The remaining $85 million raised in WA during 2005 was achieved by companies with a combined market capitalisation on listing of nearly $300 million. A result consistent with that of 2004. Similar to 2004, WA companies listing in 2005 on average raised $7 million and had an average market capitalisation on listing of $25 million. Only four of these companies raised more than $10 million. Nationally, companies worth less than $100 million on listing raised an average of $21 million and had an average market capitalisation on listing of $42 million, almost triple and double the WA averages respectively.
PricewaterhouseCoopers Corporate Finance Director, Angel Barrio says "Excluding AHG and ARF, the relatively small size of WA floats suggests that mid cap companies of between $25 to $100 million must be finding alternative funding sources or exit strategies. It is probably not surprising to see a lack of companies of this size finding themselves listing in WA given the increasingly high demand for them by both national companies looking for a WA presence and private equity groups looking to invest in the WA economy. Certainly, our experience in more and more companies requesting us to explore transactions of this nature before considering an IPO are consistent with this."
West Australian companies listed at an average discount of 4 per cent as compared to the national average premium on listing of 7 per cent. Both the WA and national results are well down on the previous year's premiums of 18 per cent and 19 per cent, respectively.
Since listing, however, WA companies have returned an average premium of 16 per cent which is similar to the national average of 18 per cent and only slightly down on the previous year's results.
Mr Barrio says, "The smaller national premium on listing, and the discount on listing in the case of WA companies, is indicative of aggressive pricing in a buoyant market where a discount is not needed to get floats away. The healthy premiums most companies have enjoyed since listing is consistent with a strong share market, a trend expected to continue in the foreseeable future".
