A Reuters report said Australian bankers have a lot to celebrate this Christmas season with the increase in underwriting fees brought about by the resurgence of initial public offerings. They are also preparing for an equally busy 2014 with a potential surge in private equity exits that will keep the market humming.
According to the report, there will be 14 more firms that will begin trading on the stock exchange before the end of 2013. Their IPOs raised nearly USD 1 billion in total, bringing this year's funds raised to an estimated USD 6 billion. Based on data from Thomson Reuters, this represented a six-fold rise compared to last year. It was also the highest attained in three years. The data also revealed that the IPO market in Australia has been the third-busiest in the Asia-Pacific region compared to being the tenth last year. This year, the top two busiest IPO markets in the region are Hong Kong and Singapore respectively.
Most of the listings were held in the final two months of 2013. Because of the spate of listings, bankers have forecasted that at the least, there will be an AUD 6 billion or USD 5.46 billion initial public offering pipeline in 2014. The revival of IPOs comes after a weakened investor appetite for new issues in the past two years because of a uncertainty in the worldwide economy and many poor performances in the secondary market, the report said.
Macquarie Group Ltd Co-Head of Equity Capital Markets for Australia and New Zealand Hugh Falcon told Reuters, "In Australia, we've been through a series of interest rate cuts... and that combination of historically low rates plus confidence around the global growth picture as well as lower volatility has attracted a lot of investors back into equities."
Sean Walsh, the Head of Equity Capital Markets for Goldman Sachs in Australia said next year will possibly be a bigger year. He told Reuters, "Next year there is potential for a lot more floats and a lot bigger floats, and I think the deal size is the key point of difference."
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