COMMODITY CAPERS: An interesting piece of research hit The Roadhouse inbox this week in the shape of a Snapshot of Australian IPO Activity for the first half of 2018 from our friends at HLB Mann Judd.
According to the business and finance advisers’ Perth-based Partner Corporate & Audit Services man, Marcus Ohm, the first six months of 2018 witnessed a slower start to the IPO market than the same period for 2017.
Through the 2018 time-frame 39 companies listed on the ASX, compared to 57 for 2017.
As always, there was some silver lining the declining IPO cloud with 2018 still managing to outperform the previous five-year average of 37 listings.
“During 2017 there were 110 listings in total and these were relatively well spread throughout the year, which is contrary to the trends seen over the past decade,” Ohm noted.
“Historically, approximately a third of new listings occur in the first half of the year, which would indicate that 2018 may still prove to be a positive year for the Australian IPO market.”
The irony continued with the month of January providing the strongest month to date – listing-wise – with 10, but money-wise it recorded the lowest total funds raised, with just $50 million, or two per cent of the total for the six-month period.
April came in as the strongest money month, thanks to the listing of L1 Long Short Fund Limited (ASX: LSF) to the tune of $1.3 billion, accounting for 65 per cent of all funds raised for the six-month period.
May was also a good month, welcoming seven new listings – the same number as April.
RESOURCES MAINTAIN THE RAGE
The resources sector continued to be a major contributor to the IPO market, making way for 16 listings in the first six months of 2018.
According to Ohm, the sector is performing on par with its start to 2017, when 15 new listings hit the bourse.
Most noteworthy is that it is the rock-kickers doing all the heavy lifting in the sector with Energy stocks failing to bother statisticians.
Source: HLB Mann Judd
“New Materials listings are still enjoying support from the market, with an average of 98 per cent of subscription rates achieved, which is similar to 2017’s subscription rates,” Ohm observed.
In the lead-up to Diggers & Dealers it is good for the Western Australian sector to be well-represented.
The state has continued its domination of the resources listings, providing 13 new listings.
New South Wales, Queensland and Victoria all recorded one listing each.
“While the Eastern states are usually home to the larger resources listings, this has not been the case so far this year with only $28.1 million raised,” Ohm said.
“Three states: Western Australia (+12 per cent) NSW (+11 per cent) and Queensland (+10 per cent) all recorded gains to the end of June, with only Victoria finishing in the red.”
With IPOs heavily slanted towards WA, it can be no surprise gold has featured heavily in the listings for the start of the year.
Five listing to date in 2018 are solely focused on the precious metal while another five polymetallic companies are also on the lookout for gold.
Copper and nickel have also enjoyed their recent rise in popularity and relevance thanks to the interest generated by the burgeoning electronics and Electric Vehicle spread across six and five listings respectively.
“No other commodities recorded more than two listings, however the diversity of the market continues to grow with over 14 different resources sought,” Ohm said.
“Coal, which for some time has struggled to gain traction in the market, recorded one listing.”
So, there we are at the halfway mark and with another 11 listings in the pipeline for 2018, coupled with an outlook of strong commodity prices and solid share price performance, Ohm predicts Materials IPOs are likely to remain strong performers for the remainder of the year.