WA float funds more than double to $1.2bn in '05: Deloitte

IPO activity in Western Australia soared in the December 2005 quarter as the state continued to lead a boom in resource exploration.

Deloitte's latest quarterly IPO report found that WA is set produce 24 IPOs in the December quarter, lifting to 58 the number of public floats for calendar 2005.

This is steady with the previous year, but the value of funds raised is set to soar by 135% from $507 million in 2004 to $1,189 million in 2005.

Deloitte Corporate Finance partner in Perth, Tom Henderson, said the $741 million IPO of Alinta Infrastructure in the first week of the December quarter was a big factor in the growth in the value of funds raised, but activity was spread across a wide range of companies during the year.

"In terms of industry sectors, resources continued to dominate IPO activity in WA, accounting for 45 of the 58 IPOs during the year.

"But the resources sector was one of the best performing industry sectors, which meant local investors enjoyed above average returns compared to investors around the nation in 2005."

"The share prices of local IPOs averaged a 51% increase against their issue price. This is well above the national average of 30%."

At a national level, the Deloitte survey found that a December boom in IPO activity was expected to lift public company float activity in calendar 2005 to a record $15.3 billion.

The value of IPOs in 2005 is set to surge in the next fortnight with the public listing of three $billion-plus companies - SP AusNet, Spark Infrastructure and Goodman Fielder. The total value of funds raised from these floats is expected to be between $5.1 billion and $5.5 billion.

These IPOs will headline a record quarter of IPO activity in the three months to 31 December, which is expected to produce 70 floats with a combined capital raising of at least $8.8 billion. This is more than double the previous quarterly record of $3.9 billion in the three months to December 2004.

IPO activity in calendar year 2005 is expected to be at least 63% higher than 2004 in terms of the amount of capital raised ($15.3 billion versus $9.4 billion), and 10% higher in terms of the number of IPOs (187 versus 170).

Mr Henderson said he expected the high level of IPO activity to continue in 2006.

"The IPO market has been boosted by the convergence of three factors - strong returns from the Australian equity market, a flood of cash from superannuation funds and the T3 effect.

"Many large IPOs may have been timed to avoid competition for equity funds with T3, which was expected to be further advanced in its public offering process.

"These factors have contributed to the record levels of IPO activity and is set to continue for at least the early part of 2006."