Hot Topics

ASX anticipates surge of IPOs later in 2024

Go to Imelda Cotton author's page
By Imelda Cotton - 
ASX listings IPOs takeovers 2024

Australia’s pipeline of initial public offerings (IPOs) is expected to ramp up in the new year thanks to a cyclical market on the rebound.

Anticipated listings for the second half of 2024 include companies in the industrials, mining and consumer discretionary sectors such as cars, household appliances, specialty items, luxury goods and leisure.

According to the Australian Securities Exchange (ASX), this new activity follows an extended quiet period since 2021 due to economic uncertainties around inflation and interest rates that reduced the number of listings globally and forced the deferment of some highly-anticipated IPOs.

Takeover trend

Australian investment firm Perennial Partners said a takeover trend had also impacted the market.

Takeovers accounted for approximately 94% of a total $309 billion in delisted value over the past seven years, although more than $441b in recycled capital had been ploughed back into the ASX over the same period.

Historically, many companies listed well before they were ready and became prime targets for mergers or acquisitions.

Some also chose the delisting path voluntarily given low liquidity levels where a stock has underperformed, become subscale and lost relevance to investors.

“We have reached a cyclical low point in IPO activity, compounded by increased takeovers as a result of attractive valuations, especially at the smaller end of town,” Perennial portfolio manager Karen Chan said.

“There has also been increased confidence from boards and management to commit to deal-making, with interest rates increasingly looking to have peaked and the low Australian dollar is making targets attractive for foreign bidders.”

Rebound a possibility

With no material sustained activity since 2021, Ms Chan said a rebound is on the cards and the “IPO window is cracking open again.”

“The M&A trend has been exacerbated by many small-cap listed companies which have been oversold—this is actually consistent with historical trends where a weaker economic environment sees a much larger sell-off versus large caps,” she said.

“This trend should reverse as conditions continue to improve… notwithstanding that it has been a quiet period, an analysis of ASX capital activity shows there has been an increase in net capitalisation every year from 2017 to 2023.”

High liquidity

The ASX is a highly liquid exchange with $8b traded daily, based on a 12-month rolling average to December 2023.

It is also one of the most active exchanges globally by listings, with 45 new companies hitting the boards in 2023.

This compares to a lower amount of capital activity across much larger global exchanges in countries including Japan (131 listings), the US (126), Hong Kong (70) and the UK (34).

The number of companies and securities listed on the ASX has reduced over the past 10 years to 2,183 as at the end of February 2024.

Takeovers have been responsible for most delisting activity, with ASX-listed companies accounting for 23% of value retained on the exchange from 2017 to 2023.

To receive notifications and invest in future IPOs and placements on the ASX, visit the Cap Raise website and register: