In 2023, the IPO market remained subdued, following a downward trend that began in 2022 after the peak experienced in 2021 post-Covid-19.
With only 32 IPOs recorded in 2023, this figure was less than half of what was observed in 2022, which itself was less than half of the number seen in 2021.
Although there was a slight increase from the previous year,the total capital raised was significantly lower compared to the highs of 2021.
While $13 billion was raised through IPOs in 2021, the amount dropped to $3 billion in 2023. Additionally, the majority of listingshad market capitalisations below $50 million.
Trends in the IPO Market
Rising interest rates have played a role in the overall decline of company valuations and share prices. Additionally, economic uncertainty presents challenges for companies aiming to raise capital through an IPO, as it can hinder investors' ability to agree on growth projections.
The number of IPOs declined from 241 in 2021 to 107 in 2022, with even fewer reported in 2023. Furthermore, the total funds raised through IPOs decreased from $12.7 billion in 2021 to $1.1 billion in 2022, with a reported $150 million raised in the first half of 2023.
Due to inactivity in markets, Virgin Australia, a significant player in the industry, had postponed its scheduled 2023 IPO to 2024.
Similarly, Cuscal, slated to issue the year's second-largest IPO, deferred its anticipated $514 million float shortly after its international roadshow.
These deferrals follow the lacklustre performance of two of2023's largest IPOs, Redox and Nido Education, both of which have witnessed disappointing trading outcomes since their ASX listing.
Recent activity in the IPO Market
One of the most notable transactions utilising an innovative listing approach involves Chemist Warehouse's reverse takeover of Sigma Healthcare.
In this arrangement, Sigma Healthcare acquired ChemistWarehouse through a scheme of arrangement, offering a combination of Sigmascrip and cash. As a result of this transaction, existing shareholders of Chemist Warehouse were anticipated to receive approximately $700 million in cash and will hold an 85.75% stake in the combined entity.
This strategic move is expected to unlock substantial synergies and establish a prominent player in the healthcare sector,encompassing wholesaling, distribution, and retail pharmacy franchising. Themerged group is projected to have an indicative market capitalisation exceeding $8.8 billion.
Recently, BHP's recent proposition of a $US39 billion (A$60billion) deal to partially dismantle and subsequently acquire Anglo American has sparked significant interest within the mining industry.
This proposal, swiftly and firmly rebuffed by Anglo,signifies a potential milestone in the history of one of the world's oldest mining companies. The deal would have granted BHP control over some of the most exceptional and extensive copper mines at a critical juncture when global demand is rapidly outpacing supply.
Anglo American recently had turned down an enhanced acquisition proposal from BHP, which presented shareholders with a 15% increase over its initial bid made in April.
Another transaction involving Tasmea Limited has raised $59million IPO bookbuild, with the deal fully underwritten and allocations made.
Tasmea successfully sold 17% of its company through the IPO,with its management consenting to a 17-month escrow period.
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