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New IPO stocks have never ceased to attract share market participants. The transition from a private to a public company is not only an eventful time for the company, but also for new and old investors along with media and research platforms. Upcoming IPO companies and new IPO stocks have always stolen the share market show (for the good or the bad!) irrespective of the bear or bull situation.

But what exactly is an IPO and what do they offer? Let’s get a gist of it-

IPO & Its Offerings

Abbreviated for initial public offering, IPO is the procedure wherein a private company offers shares to the public in a new stock issuance. In other words, IPO is the process through which a company gets its name listed on a stock exchange. The term is often interchangeably used as listing or float.

IPOs have a lot to offer, for every party involved- be it the company launching itself on the exchange, shareholders and investors awaiting to grab a bite of its ownership or media houses and research centres eyeing market dynamics resulting from the process.

Australian IPO Market- Why Choose ASX?

Australia’s most active stock exchange is the Australian Securities Exchange (ASX). There are lot of reasons that propel companies, both domestic and international, to get themselves listed on the ASX. Few of these are listed below-

  • The ASX is the world’s 4th largest pension pool, expected to grow to $ 10 trillion by mid-2030s
  • It offers enhanced liquidity and had a $ 1.75 trillion in trading turnover in 2019
  • Through 2014–19, there has been a good history of an average of $10 billion in IPO capital raised per annum
  • ASX aims to support both early stage and mature companies
  • The exchange is counted amongst the Top 10 global exchange for capital raising and has 45% international investors, that paves a gateway to global capital
  • The globally recognised exchange has more than 2.2k listed companies across multiple sectors and geographies
  • The country’s large, fast-growing pension pool ($ 3 trillion pool of capital), main board listing and earlier entry to globally recognised indices makes ASX a lucrative option for international companies. This could be the probable reason that over 270 international companies are listed on ASX.

Now that we understand the reasons due to which companies are drawn towards listing themselves to gain access to capital in the world’s fastest growing region, let us understand the process of ASX listing-

ASX Listing Process

The ASX follows a 7-step listing process, which is streamlined. Ideally, it takes approximately five months to complete the procedure (beginning from appointing advisers).

7-step listing process,

With the ASX IPO concept clear, it will be interesting to know about few upcoming listings. A preview of upcoming floats can help prospective investors to understand what’s coming and make associated decisions, well in advance.

Upcoming Floats

1- AML3D Limited

  • Proposed Code- AL3
  • Proposed Listing Date- 26 March 2020
  • Market Cap- ~ 26 million
  • Issue Price- $ 0.20 per share (45 million new ordinary shares)
  • Capital to be raised- $ 9 million

Based in Adelaide, AML3D is a start-up company established to commercialise WAM® (Wire Additive Manufacturing), which is an emerging innovative metal additive manufacturing technology for the cost-effective production of metal components and structures (large, high performance).

In the next couple of years, the Company plans to-

  • Diversify services and products into a CAD Design service to optimise design efficiency
  • Design and build mobile 3D WAM printers
  • Extend market reach by building on the multiple trials undertaken (incl. trials for overseas customers)

As per the Company, the IPO has opened with strong demand. MD Andrew Sales said –

2- United Malt Group Limited

  • Proposed Code- UMG
  • Proposed Listing Date- 24 March 2020 (trading to commence initially on a deferred settlement basis)
  • Trading on normal settlement basis- 2 April 2020

United Malt Group Limited (UMG) is GrainCorp Limited’s (ASX:GNC) malt business, to be demerged to create a separate ASX-listed company. GNC is a diversified Australian agribusiness that connects growers to domestic and international customers.

UMG is the fourth largest commercial maltster, globally, with customers comprising global brewers, craft brewers, distillers and food companies.

According to a recent presentation by GNC, GrainCorp will retain a 10 per cent minority interest in UMG to provide additional balance sheet resources and financing flexibility. Moreover, shareholders will receive 1 UMG share for every share held in GNC at the Demerger Scheme Record Date (25 March 2020).

On 20 March 2020, GNC announced that the Federal Court of Australia has made orders approving the scheme of arrangement to give effect to the demerger, which was overwhelmingly approved by GNC shareholders at the Demerger Scheme Meeting and General Meeting held earlier (16 March 2020).

GNC is now expected to lodge a copy of the court’s orders approving the Demerger Scheme with the ASIC and advise the market of the Scheme’s effectiveness later.

Amid the ongoing sell off spree and market volatility, largely driven by the COVID 19 nervousness, it will be interesting to watch the launch of these companies and analyse if they succeed in building on to investor sentiment positively.

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