The IPO market experienced a marked deterioration in 2023, with just 32 listings for the whole year, the lowest level yet measured by HLB Mann Judd’s IPO Watch Australia Report. The 2023 level was 63 per cent lower than the 87 listings in 2022 and 83 per cent lower than the record-breaking number of 191 IPOs in 2021.
IPO Watch Australia analyses ASX listing activity from the previous 12-month period (excluding property trusts). In 2023, we saw just 32 listings over 12 months, reflecting a much more difficult economic environment.
There were just 14 listings in the first six months to June 2023 and a further 18 in the second half of the year. The total funds raised for the year were $847 million, reflecting a 21 per cent fall compared to 2022 when the total funds raised were $1.07 billion. Last year was the first time since 2012 that the total amounts raised in ASX listings did not exceed $1 billion.
The current pipeline remains very subdued with many businesses waiting until economic conditions improve before considering an IPO. The macroeconomic and geopolitical environment in Australia and globally, including high inflation and capital costs, has presented significant challenges for most companies.
However, there is some hope for improved listings in 2024, including resources listings. Share markets have hit fresh records in the US and Australia this year and some commodity prices including iron ore are rising. If the gold price remains above the US$2000 level, or lithium climbs, this might trigger greater interest in junior explorers and a higher level of IPO activity overall.
IPO returns in 2023
In terms of price action in 2023, only 18 listings experienced a first-day gain on the ASX, with an average gain of 6 per cent, down from a 16 per cent gain in 2022. Reflecting the tougher conditions, only 11 were able to maintain their listing price or move higher by the year’s end. As at 31 December 2023, the average loss across all listings against IPO price was 10 per cent, compared to a year-end loss for IPOs of 2 per cent in 2022.
Of the 32 listings in 2023, there were seven large-cap listings (companies with a market capitalisation over $100 million) representing 22 per cent of total listings. Large cap listings contributed 76 per cent of the total funds raised in the year. On average, each large cap raised $92.5 million, with Redox Limited (ASX: RDX) securing the largest amount of $402 million.
In the small-cap market (companies with a market capitalisation of $100 million or less), the $10 million to $25 million band raised the highest amount of funds, reaching $68.39 million. This represented 8 per cent of the total amounts raised during the year.
On a positive note, 29 of the 32 listings in 2023 were able to raise their subscription target amount, 91 per cent of all listings and an increase from 70 per cent in 2022. Listing in the $50 million to $75 million market cap band recorded the best share price performance, with a year-end gain of 29 per cent, delivering a healthy return to investors.