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Strong investment growth possible despite slowing IPOs
A relatively low number of initial public offerings hitting the market in the first half of 2019 has not stalled opportunities for strong gains by investors.
Strong investment growth possible despite slowing IPOs
A relatively low number of initial public offerings hitting the market in the first half of 2019 has not stalled opportunities for strong gains by investors.
At an IPO watch update, HLB Mann Judd outlined that only 23 companies had listed in the first half of this year, which it attributed to 2018 equity market conditions and a fall in the number of material companies.
According to the accounting firm, from a share price perspective, 2019’s IPOs have performed strongly, with 17 of the 23 IPOs recording first day gains averaging out at 21 per cent.
All of those companies have continued to grow post-float, with an average gain of 62 per cent witnessed across the board.
As well as providing stronger returns for investors, the IPOs themselves have seen stronger subscription numbers in the first six months of 2019 when compared to the same time period last year.
It was highlighted that 19 of the 23 IPOs met their subscription targets compared with 74 per cent the year before.
Commenting on the half-yearly figures, HLB Mann Judd partner Marcus Ohm said, “This is a particular good result and represents a return to the trend of IPOs tending to outperform the market which has itself had a good six months.”
He did concede that despite positive growth, the sector as a whole has seen “significantly reduced” activity in terms of companies listed and money invested.
“A total of $823 million was raised during the first half of this year, which is significantly down on the previous two years with $2.5 billion and $1.9 billion being raised in the first half of 2018 and 2017, respectively,” Mr Ohm stated.
He also flagged the lower number of IPOs as attributable to less movement in the materials industry.
“Materials had only three new listings for the period, compared with 16 for the same period last year,” he noted, calling out the reduced activity as reflective of broader macroeconomics issues and current investor sentiment.
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