December IPOs: Hope for a Late Turnaround?
The procedure of providing securities of a private company to the share market in a new stock issuance is known as IPO or initial public offering. IPO enables an entity ‘offering’ its securities to tap a large number of investors to offer with capital for future growth or even for working capital.
An investor seeking to make an investment in an IPO should keep a few things in mind which as are as follows:
- To make an investment, one has to fill an application form that can be found in a prospectus, mostly gained from the broker.
- One might have to limit the minimum number of securities one can subscribe to.
- Also, there is a set period for completing the IPO paperwork.
- Further, the investor might not be aware of the number of securities, been issued with until the float date.
The past quarter has been one of those with failed IPOs at the ASX, a trend which has necessarily impacted the Exchange’s reliability for initial listings. However, December could provide a reprieve, with a few strong offerings prodding investors’ enthusiasm.
The biggest disappointment of the year was the cancellation of Latitude’s $4bn dollar float, which was expected to raise about $1bn equity. The cancelled listing was the second attempt in as many years to publicly offer Australia’s biggest non-bank lender, after they had originally pitched for a valuation of $5bn.
This was in October, in which six IPO’s on the Exchange were cancelled, among them household names like the owner of popular smoothie brand Boost Juice. When online real estate portal PropertyGuru pulled the plug on their listing the same month, chairman Olivier Lim stated, “This decision took into account current IPO market sentiment.”
Last week, another non-bank lender – Xynapse – pushed their IPO a year further, after failing to garner enough interest to support their $80 million equity target.
It appears that investors are increasingly wary of IPOs, which has led investment funds to shift away from initial offering purchases. Despite the Australian benchmark, S&P ASX 200 rising around 18.78% in YTD period (as on 9 December 2019, the ASX has only hosted about $1.15bn in new listings, the lowest figure in years.
Could things be about to turn around? The big listings coming up this month seems to suggest so.
Dec 6: Elanor Commercial Property Fund (ASX: ECF)
The company makes an investment in high investment quality office properties with solid cash flows (underlying) and ability to make substantial value-addition. ECF’s portfolio includes 4-office properties, 2 in Brisbane, one in Adelaide.
Eleanor is a mid-sized listing looking to raise $174 million at $1.25 a share. This new property fund is a group with assets across Queensland, Western Australia and South Australia. The IPO is moving forward with confidence likely due to the high yield that is being advertised for next year of 7.2%, which has done a lot to attract interested buyers.
Dec 6: Tyro Payments (ASX: TYR)
The entity is the biggest EFTPOS provider of all ADIs in the Australian region. The company provides Medicare and private health fund claiming and such services. It has smart technologies that are easy to be utilised and created to save its consumers - time and money both.
Tyro is the star of the December line-up. The EFTPOS processing company has set it’s share price at $2.75 – top of the range, valuing the company at $1.36 billion. While their hopes to raise $298 million may seem overinflated in the broader IPO landscape, interest in the stock is significantly oversubscribed, and anticipation for the float is continuing to rise.
Dec 11: Nitro Software Ltd (ASX: NTO)
Nitro Software’s origin can be traced to Australia though it has employees from all over the world. At present time, NTO is an award winner and leader in international arena in document productivity, change management and such.
Nitro Software is a Melbourne-based digital software company pitched as an Adobe competitor. The company is seeking to raise $110 million at $1.80 a share, which places their valuation at $325 million. Started just 15 years ago, Nitro has a predicted revenue of $40.5 million for 2019/20 period, operating at a net loss of $7 million.
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