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IPOs make a comeback with 23% gains for investors
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By John Kavanagh
Companies in the technology sector and the consumer goods and services industry were the best performers among initial public offerings on the Australian Securities Exchange last year.
According to a review of the IPO market by Deloitte and MergerMarket, 2015 was a good year for investors to get into floats.
There were 97 listings on the ASX last year, worth a total of $17.6 billion in market capitalisation. The number of listings was up 33 per cent, compared with 2014, but market cap was down 32 per cent.
Listings finished the year with their stock prices an average of 23.8 per cent above their price at listing. Weighted by market capitalisation, the average share price increase was 18.2 per cent.
The biggest gains were by skin care company BWX Ltd, whose shares went up 138 per cent, cloud services company Megaport (up 123 per cent) and communications network builder Superloop (up 110 per cent).
Companies listed in 2014 had average share price growth of 37 per cent from the date of listing to the end of last year.
Among last year’s listings, there were 20 companies whose stock prices fell more than 10 per cent from the listing day to the end of the year. These underachievers were predominantly energy and resources companies.
The role of private equity companies in the IPO market came under the microscope, following criticism of PE after the collapse of retailer Dick Smith.
Deloitte found that the performance of private equity exits has exceeded non-private equity exits.
Over the past three years private equity-backed IPOs have delivered returns of 47.6 per cent on average, compared with an average of 28.4 per cent for all IPOs and the 13.9 per cent growth in the S&P/ASX 200 index over that period.
Deloitte says there is a trend for vendors to retain larger holdings in their businesses, as a way of demonstrating to an increasingly sceptical investor community they will continue to drive growth in the business.
In 24 cases, there was no-sell down at all by vendors.
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