Last week, EY released its EY Global IPO Trends: Q2 2017 report, revealing that global IPO activity was at its highest in H1 2017 since 2007, with a total of 772 IPOs raising US $83.4 billion. This represents a year-on-year increase of 70 per cent in deal volume and 90 per cent in deal value.
Speaking to Accountants Daily, EY IPO leader Gavin Sultana said that Australia was a strong contributor to the global activity.
“Australia was ranked fourth globally for IPO activity in H1 2017 by number of listings, however activity was dominated by small caps with only three listing raising over $50 million in proceeds,” Mr Sultana said.
“Conditions for large cap IPOs in H1 2017 were more challenging than 2016 with investors adopting a cautious approach to new listings which has impacted pricing and restricted volumes.”
Mr Sultana said that this is good news for accountants who focus on the smaller IPOs, but raises a challenge for those who focus on the larger end of the market.
“The change in mix towards smaller and early stage IPOs will provide opportunities for certain parts of the market such as firms focused on small cap mining and metals companies,” Mr Sultana said.
“For firms focused on mid-to-large companies, they will need to continue to demonstrate their experience in supporting dual track exit processes as vendors seek to maintain optionality and capitalise on strong demand from alternate sources of capital, including overseas buyers.”
Looking ahead Mr Sultana expects the second half of 2017 to be similar to the first half, with small cap IPOs and foreign company listings dominating the market.
“We anticipate that activity for small caps will remain strong, supported by an increase in the number of foreign companies listing on the ASX which accounted for approximately 20 per cent of IPO listings in H1 2017 in Australia,” he said.
“We expect investors to continue to be selective in which larger issues they support restricting IPO volumes at the top end of the market.”