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Deloitte 2016 half year IPO market update
Despite a backdrop of local and global financial market volatility with increasing political and economic uncertainty following the Brexit Referendum and the Federal election campaign, Australian IPOs remain firmly in favour.
2016 half year IPO market update
Deloitte’s latest IPO review covering the first half of 2016, finds that new listings confidently outperformed the market – up 16.5% on a weighted average basis, while the ASX closed 1.2% down. The start of the year typically tends to be the window for smaller raisings, but is also an indicator of the level of capital raising activity still to come in 2016.
According to Deloitte’s 2016 half year IPO market update:
- 33 listings in total, with a market capitalisation of $5.7bn, and $2.6bn of new capital raised
- 13 listings to the end of June each exceeded $75m in market capitalisation
- Smaller listings delivered, on average, similar returns to the larger ones, but also displayed significantly higher volatility
- Technology, media and telecommunications (TMT) continues to lead listing volumes by sector, with 12 listings in the first half of 2016 (average gains 17.3%)
- Healthcare listings, while returning average gains of 10.2%, were mixed in terms of individual performance
- Financial services represented 15% of first half 2016 listings and delivered average gains of 13.2%.
The key challenge for our economy is its reliance on China which means Australia will continue to adapt its traditional resources offering towards a consumer-led growth model, we expect to see more IPOs in this space. For investors, the immediate challenge now is the limited supply of growth stocks as private equity firms embark on their next investment cycle, alongside a renewed focus on asset quality and the fundamentals of businesses seeking to access capital, such as a strong and diverse management team, a highly articulated vision for future business growth to drive value, and, for more mature businesses, a demonstrated operational and financial high performance track record.
However, the 'new normal' pipeline is here to stay, if anything we see activity levels strengthening over the medium term horizon. The pipeline over the next few months includes quality assets such as The Good Guys, Autosports Group and Inghams, with Quadrant also reported to be considering an exit of its Barbecues Galore and Super A-Mart businesses. The remainder of 2016, and looking further ahead into 2017, will also likely see a number of REIT listings, with an estimated value of $3bn, coming to market, as investors look to strong yields amongst global uncertainty.
The data shown below is available on our interactive dashboard. This includes:
- Key statistics including all 2014, 2015 and 2016 IPOs by geography
- Performance by industry sector
- Performance of private equity listings for the last three years
2016 key metrics by geography
Key metrics - private equity exits for last three years
Deloitte 2016 IPO Report
In spite of a shaky start to 2016 for Australian and global markets, local IPOs generally bucked the trend. 2015 saw 97 ASX IPO listings (up 33% over 2014), with a market capitalisation of $17.6 billion and capital raised in excess of $8.6 billion. The 2016 report includes insights from Chris Hadley, Executive Chairman of Quadrant Private Equity, as well as a discussion with Philippa Stone and Philip Hart of Herbert Smith Freehills.
Deloitte 2015 IPO Report
The Deloitte 2015 IPO Report, was prepared in collaboration with M&A intelligence provider Mergermarket. It explored Australian IPO activity in 2014 and presented an outlook for 2015, while reflecting on the increasing complexities of structuring an IPO, the move away from a market dominated by resources companies, and private equity exits through the capital market.
A market update was published in September 2015.