Half Year IPO Wrap

Key takeaways from ASX listings for the First Half of 2017

In Australia, the IPO market is well and truly alive and kicking! A total of 55 companies listed onto the ASX in a vibrant start to the 2017 calendar year, listing with a combined market capitalisation of $3,410m. Of those, 23 had beat their IPO price by 30 June 2017, with 5 achieving more than a 100% return.

Here are the results of the 55 floats to take place in the first half of 2017:

half-year-ipo

half-year-ipo-chart

 

Top Ten IPOs by Market Capitalisation
Company Industry Market Cap. At IPO
($AUDm)
Funds Raised
($AUDm)
Bingo Industries Limited Waste Industries 628 440
Oceania Healthcare Limited Healthcare 445 185
Plato Income Maximiser Limited Financial Services 326 326
Moelis Australia Limited Financial Services 294 59
ELMO Software Limited Technology 108 25
ReTech Technology Co., Limited Technology 108 18
Visioneering Technologies, Inc. Financial Services 83 33
Urb Investments Limited Financial Services 80 80
Big River Group Pty Limited Property 77 17
Audinate Group Limited Tecnology 73 21
Subtotal 2,222 1,204
Others 1,188 360
Grand Total 3,410 1,564
Source: S&P Capital IQ, William Buck analysis

2017 so far has been a year of surprises

What were some of the unexpected surprises and key new developments dominating this list of 55 new entrants to the ASX? Perhaps it was the evenness of the spread of value over the new entrants, only $2,222m of the $3,410m in value was attributed to the top 10 listings. Why ‘only’? One of the characteristics of the ASX is its significant segmentation between its larger and smaller cap companies. However, from this list, those outside the top 10 still comprised 35% of the total market value of all the new entrants. To us, this signals that the market currently views positively new ASX listed entrants, the new technologies or products that they seek to commercialize and their ability to disrupt existing and established players.

Another key surprise; only one biotechnology company was amongst the IPOs, whereas biotech’s have previously been an important staple of ASX listings. We have noticed that some biotech’s are now going to the US for funding, where investor knowledge and appetite of such stocks is far greater.
Beyond these points, we have identified 3 key themes in our observations that we believe have specific resonance for the ASX market, and for its future trends ahead:

Medicinal cannabis

Market sentiment on the back of recent federal and state-based regulatory reforms has been extremely positive for medicinal cannabis and is emulating the strong, long term stories similar stock have had both Canada and in the US. In Australia, there were 4 new medicinal cannabis listings, and all performed strongly:

Enterprise Prospectus Price
(cents)
30 June 2017
(cents)
Growth
Cann Group 30.0 63.0 110%
Roto-gro 20.0 36.0 80%
The Hydroponics Company 20.0 30.0 50%
eSense Lab 20.0 29.0 45%

From Lithium to Cobalt

Throughout the first half of the 2017 calendar year a further 16 junior explorers floated onto the ASX. Junior exploration companies have always been a staple of the Australian micro-mid-cap environment, with a strong investor base and established entrepreneurial networks. The theme carried over from 2016 for the six months, was batteries – only with a twist. Lithium, the darling of 2016 was less appealing; in its place cobalt attracted significant interest (Australian Financial Review, if you thought Lithium was exciting, try cobalt – 11 April 2017).  As a snapshot, these were highest and lowest performing IPOs of the junior explorers:

Enterprise Principal Product(s) Prospectus Price
(cents)
30 June 2017
(cents)
Movement
Ardea Resources Cobalt and nickel 20.0 58.0 190%
Lithium Consolidated Lithium 20.0 9.0 (55%)

Tel Aviv comes to Australia

Also a trend from 2016 was the continuing interest of Israeli-based tech firms in the ASX-listed environment. In the first half of the 2017 calendar year 4 Israeli enterprises successfully listed on the ASX, all promoting advancements to technologies in communications, surveillance and healthcare. Key reasons for the interest include Australia’s technology infrastructure, proximity to Asia and Australia’s credentials known for supporting in capital markets (relative to the US) early stage ventures (AFR – ASX preparing for rush of Israeli tech listings).

About the authors

Nicholas Benbow is a Director at William Buck with a specialisation in providing assurance to clients listing or contemplating listing on the ASX. Over the past 5 years he has worked with numerous enterprises that have either listed or relisted on the ASX.

Liz Smith is a Corporate Advisory Director at William Buck. Liz has extensive experience across mergers and acquisitions, due diligence, valuations and IPO transactions.

Disclaimer
The observations, views and thoughts expressed by both authors in this article are their own entirely and do not in any way represent financial advice that should or can be relied upon for investment decision making.