IPO appetite continues growth

Private equity (PE) firms and small to medium sized businesses (SMEs) will dominate local listings in the next 12 to 18 months, as initial public offering (IPO) appetite in Australia continues to grow.

Figures from the latest quarterly EY Global IPO Trends: 2014 Q3 report shows listing activity continues to climb, with 44 IPOs raising $9.7 billion in the first nine months of the year.

This equals the volume of IPOs for 2013 and surpasses the total $6.1 billion raised during 2013. So far, the 2014 year-to-date tally includes 20 IPOs in Q3 raising $3.8 billion, again led by PE-backed listings.

Global numbers tell a similar story, the report found, with 851 IPOs raising $212.2 billion in the first nine months of the year, a 49 per cent increase in volume and 94 per cent increase in proceeds compared to the same period in 2013.

According to Gary Nicholson, Oceania transaction support leader at Ernst & Young, the September quarter IPO numbers for Australia reflect the positive sentiment fuelling the broader transactions market, including IPOs.

“Investors are hungry for the right businesses that are fairly priced. The IPO pipeline is very strong right through until the end of November, so we would expect the fourth quarter to be even stronger.

Nicholson added an uptick in the number of small businesses seeking a listing on the ASX in the next 12-18 months is expected, as business owners look to take advantage of better conditions.

Globally, Asia-Pacific saw more IPOs than other region, with 339 new listings compared to 215 IPOs in the same period in 2013.

To read the full report, please click here.