It looks like Australia is eventually catching up to the surge of IPOs across the globe, as the country looks set to deliver the busiest month for new listings in 2020. Figures coming out of the country show that companies have already priced about $712 million worth of first-time share sales so far in October, putting it on the right track for the highest monthly volume in 2020, according to data from Bloomberg. The figure is more than double the $322 million recorded through the end of August.
The pickup can be attributed to a rebound in Australia’s benchmark S&P/ASX 200 of about 40% from its March low, putting the country back onto the map of global IPO activity.
“We do see market conditions as being conducive to IPO issuance over the balance 2020 and into 2021,” said Hamish Whitehead, co-head of equity capital markets for Australia and New Zealand at Citigroup Inc. “We’re reasonably constructive on the outlook for 2021 because should there be a reopening there is a backlog of deals from nine to 18 months ago.”
MyDeal.com.au, an Australian online retailer shot up in its first day of trading after a A$40 million ($28 million) IPO, closing at A$1.75 with an opening price of A$1 on October 22. Popular respiratory protection equipment maker, Cleanspace Holdings Ltd., also listed last week, trading at more than 60% above its offer price.
While the country has done extremely well in recent times, experts say that the world may have not seen Australia’s biggest IPO of 2020 yet. Brookfield Asset Management Inc. recently started gauging investor demand for an initial public offering of its coal terminal operator, a move that could lead to an equity value of up to A$1.5 billion.
Other IPOs are also set to storm the market soon, with the likes of Home Consortium Ltd., a real estate company planning an offering of its supermarket-focused HomeCo Daily Needs REIT, which could raise as much as A$300 million.
The amazing figures achieved so far are however historically low, as only $1.2 billion of first-time share sales have been priced so far in the year, compared to the $4.7 billion recorded in 2019 and $6.3 billion in 2018. Investors are understandably treading with caution, especially due to the U.S. presidential election and COVID-19 lockdown in Victoria.
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