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2017 Australian IPO wrap: A year of surprises

Australia’s IPO market defied expectations in 2017 to deliver its highest number of ASX listings since the global financial crisis.

According to the latest edition of Deloitte’s IPO review, it was a strong year for the local market, with 115 companies listing, up from 94 in 2016. Of these, 29 listings exceeded $75 million in market capitalisation and accounted for 87 percent of the $6.7 billion in capital raised last year. The weighted average performance for 2017 was 36 percent – the market’s strongest result in recent years.

“Initially expected to be one of the more muted years for equity capital markets in Australia over the last five years, 2017 should have silenced a few critics,” said Ian Turner, Deloitte’s National M&A Leader.

Three quarters of new listings came from small caps, which raised $820 million in new capital and achieved a combined new market capitalisation of $2.2 bilion.

“The Class of 2017 was dominated by emerging companies,and even though these small caps represented only 12% of the total capital raised via IPOs on the ASX in 2017, it is important to recognise the value these growth companies bring to the  market and the economy,” said Tapan Verma, Deloitte’s Lead Director for IPO Services.

“Small caps certainly remained heavily in favour, delivering average gains of nearly 70%.”

The standout sector for new listings was financial services, followed by commercial services, energy and resources, and health care.

The Australian market remains a destination for foreign companies, with 25 internationally-based companies successfully listing on the ASX to raise $512 million and going on to achieve an end-of-year market capitalisation of $1.71 billion.

Looking to the remainder of 2018, Aaron Black, Head of Equity Capital Markets Advisory, predicts the activity will continue.

“Stronger economic growth, and lower unemployment, are positives for the IPO outlook, which we believe will see capital raising volumes comfortably exceed 2017 if the large mooted floats, including Latitude and Colonial First State, together with the likes of Prospa Advance, take off.”