For the first time since 2007, large capitalisation initial public offerings (IPOs) dominated the market in both quantity of listings, and the funds raised, according to the latest HLB Mann Judd IPO Watch: the market for emerging companies report*.
Two-thirds (67 percent) of IPOs during 2014 were by companies with a market capitalisation over $100 million, up from 39 percent in 2013 and a significant increase from 2012 where small cap companies made up 93 percent of all listings. In total, large cap entities represented 99 percent of all amounts raised.
Marcus Ohm, author of the report and partner at HLB Mann Judd Perth, said listings by healthcare and related companies dominated the market, representing 53 percent ($14.1 billion) of the total market capitalisation of all listings.
“Seven of the ten largest listings during 2014 were from companies in the healthcare sector or which operate in direct support of it.
“Over 49 percent of all funds raised were through the listings of Medibank Private Limited and Healthscope Limited alone, who raised $7.9 billion between them
“This trend looks set to continue in 2015, with seven proposed listings (out of a total of 14) coming from healthcare and biotechnology companies,” Mr Ohm said.
In total, there were 58 IPOs during 2014, an increase of 18 percent over 2013. However, this number is still down on the five-year average of 57 listings.
“Equally, there is still a high level of caution about the market at the small cap end,” Mr Ohm said.
“Investor activity in 2014 indicated strong support for larger cap listings and, in particular, a bias towards those companies with established and predictable earnings and with solid growth potential. We therefore expect that the IPO market will continue to be difficult for smaller entrants in 2015 unless they have a very attractive investor proposition.
“Whilst investor appetite is returning and support for large IPOs is strong, there is still a high level of caution about the small cap end of the market”.
During the year, within the small cap sector, most listings were within the $10 to $25 million range (eight listings raising $31.6 million) and the highest amount of funds raised was within the $50 to $75 million range (four listings raising $98.3 million). Average funds raised by small cap companies were slightly down in 2014, at $10.4 million, representing a decrease of 13 percent from $12 million in 2013. However, this amount is still higher than 2011 and 2012, where the averages were $6.8 million and $5.3 million respectively.
Click here to download a copy of the report.
HLB Mann Judd is an Australasian association of independent accounting firms and business and financial advisers, with offices in Australia and New Zealand.
* Emerging, or small cap, companies are defined as those with a market capitalisation of $100 million or less. All data excludes property trusts and investment companies.
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