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IPO activity set to surge by mid-year |
Contact: Steve Woosnam
Deloitte
Partner, Corporate Finance
0414 607 531
Contact: Duncan Buckeridge
Insight Economics
(03) 9671 6912
Contact: Melinda Loew
Deloitte
Manager, Media & Communications
+61 (0) 404 058 616
IPO activity is set to surge by mid-year after a seasonal low in the March 2007 quarter, according to the Deloitte IPO Report - Quarterly Update released today.
Deloitte Corporate Finance Partner Steve Woosnam said 39 IPOs with a combined capital raising of $256 million were expected to list in the March quarter by the time it draws to a close this week.
“This was well ahead of 19 IPOs that raised just $150 million in the previous corresponding period, but still below the quarterly average.
“The first quarter of the calendar year was a traditionally a period of lower activity, following the December quarter peak,” Mr Woosnam said.
“While the number of IPOs was about average, smaller resource explorers accounted for 85% of all floats, and this kept a lid on the value of funds raised.”
Resource sector IPOs were again the five best performing with the top five returning an average gain for their investors of almost 200%. Resources accounted for the top 13 places in a ranking of all IPOs in the March 07 quarter by performance.
Deloitte Insight Economics Partner Duncan Buckeridge said the strong returns in the resources sector IPOs mirrored the key role the sector is playing in broader Australian economic performance.
“While national economic growth was a relatively sluggish 2.8% in 2005-06, in the resources rich Northern Territory, Queensland and Western Australia economic growth rates were far higher, at 8.6%, 4.9% and 4.9% respectively,” Mr Buckeridge said.
“It should be noted that the Reserve Bank has recently endorsed the view that the resources boom has some distance to run and has predicted that the strong Chinese growth underwriting the expansion of the Australian minerals industry could last for decades.”
Mr Woosnam said IPO activity was set to pick up in the next quarter, with almost $3 billion in IPOs already scheduled for the next few weeks.
“This includes the estimated $2.7 billion IPO of Boart Longyear, one of the world’s largest providers of drilling services, India Equities Fund ($200 million) and McArthur Cook Asian Real Estate ($80 million),” he said.
Mr. Woosnam said IPOs in the latest quarter (up to the 21 March survey date) produced an average gain of 40% compared to issue price.
“Investor support for other industry sectors remained strong. The December 06 quarter produced a range of large IPOs in non-resource industries that have generated excellent returns for investors,” he said.
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