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The ASX 2022: Difficult year for IPOs, but number one for secondary capital raising

ASX News, The Market Online Deal Room
22 December 2022 15:00 (AEST)

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Initial Public Offering (IPO) activity on the Australian Securities Exchange (ASX) was at its lowest level in more than a decade over 2022, with just over 100 new listings.

It follows an IPO record last year when 241 companies joined the exchange having raised $12.7 billion, including nine companies with market caps exceeding $1 billion on listing. 

The total amount of IPO capital raised this year was $1.032 billion across the 104 ASX debutants.

This year, the largest IPO by value was Mali lithium play Leo Lithium (LLL), which raised $100 million with 70 cent shares and debuted with a market cap of $691 million. Shares have since been trading lower than the IPO price, sitting at 49 cents at market close on December 20, when its market cap sat at $587 million.

The total figure of 104 IPOs on the ASX was well below the five-year average of 145 in a calendar year.

ASX General Manager of Listings James Posnett said the macro-economic climate in 2022 had been “extremely challenging” for IPO activity.

“We‘ve had geopolitical issues, inflationary issues this year, and the IPO market globally has just been very challenged,” he said.

“Last year was a record-breaking year, so it’s coming off the back of an exceptional 2021 calendar year.

“The last time we saw the IPO market this quiet was 2012. It really takes a larger lower-risk IPO, a profitable company typically, to re-open the market in these cycles. Investors are going to be a bit wary initially, but we see the market opening up a bit more broadly next year.

“The bottom line is inflation needs to be under control; that will give confidence back to the market.”

Mr Posnett said most of this year’s IPOs had been in the materials sector.

“There’re a lot of mining companies coming to market. They’ve typically been focussed on battery metals and the decarbonisation theme,” he said.

“In those new listings we also have spin-offs, we have dual-listings … for example, we had Block (SQ2) at the start of the year, which dual-listed on the ASX. Block didn’t necessarily have to do that, but we see that as a great endorsement of our market.”

Secondary Capital Raising

When it comes to secondary capital raising, the ASX reported a more buoyant result over 2022.

There were more than 926 capital raisings, including placements, rights issues and share purchase plans, which hauled in about $26.85 billion. This number was about $37 billion with Dividend Reinvestment Plans, employee shares and options issues.

Yet, this was still below last year’s 1034 ASX raises that pulled in $46.4 billion.

Even so, the ASX this year again ranked number one globally for the number of secondary capital raisings, ahead of Hong Kong (HKEx) and New York (NASDAQ), which each reported less than half as many raises.

The ASX came in at number six globally in terms of the amount raised.

Mr Posnett said Australia punched well for its weight.

“Secondary offerings have held up very well this year,” he said.

“Those raisings mostly have been growth-oriented, whether that’s organic or M&A (mergers and acquisitions).

“There have been some M&A opportunities — both cross-border and in Australia — that companies have taken advantage of, but most of it has been more towards growth, which is very encouraging.”

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