Year 2019 in Review: Best and Worst Performing IPOs

From failed IPO’s like Latitude and PropertyGuru to the most successful ones like Osteopore Limited (ASX:OSX) and Invex Therapeutics Ltd (ASX:IXC), the Australian IPO market has seen it all last year. The IPO market continued to grab investors’ attention in 2019 for all the good and the bad reasons.

After observing the largest value of ASX listings in over a decade in 2018, about 63 companies joined the exchange platform in 2019 via Initial Public Offerings (IPOs). Though the figure was significantly lower than 95 market floats recorded in 2018, most of the newcomers finished the year above their issue price in 2019.

Moreover, fintech players constituted a larger portion of the new market entrants, making 2019 as one of the strongest years for fintech IPOs. Australian IPOs saw several ebbs and flows last year, with a number of companies entering with a flourish of trumpets, while many others facing an investor exodus.

But what has spread glad tidings of joy is the ~20 per cent return delivered by the Australian benchmark index, S&P/ASX 200 in 2019 (as on 31^st January 2020). This demonstrates that the last year has been a good time for equities.

Given this backdrop, let us cast an eye over the IPOs that emerged as the losers and winners on their first day of trading in 2019.

Best Performers by Day 1 Return

Osteopore Limited made the best ASX debut in September last year, delivering a return of over 250 per cent on the first day of trading itself. The medical technology player raised $5.25 million before costs with the issue of about 26.25 million shares at a price of $0.20 per share.

The Company’s stock closed the trading session at $0.725 on its first trading day, becoming the best performing IPO by Day 1 return. At an issue price of $0.20 per share, the Company’s share price, which trades at about $0.62 mark currently, is now up around 210%.

It is worth noting that the Company has delivered a total revenue of more than $1 million in CY2019, after achieving a quarter on quarter revenue growth of 21 per cent in the Q4 2019.

In addition to Osteopore Limited, Invex Therapeutics Ltd also made headway on its first day of trading by raising $12 million through its IPO. At an issue price of $0.4, the Company’s share price, which trades at about $1.11 mark currently, is now up around 177.5%.

Worst Performers by Day 1 Return

Medicinal cannabis player, Cronos Australia, that performed the worst on Day 1 of trading in 2019, raised $20 million via IPO by offering 40 million shares at $0.50 each. However, the stock opened lower $0.355, closing 32 per cent down.

One can note from the above table that most of the IPOs that performed worst on the first day of trading were marked ASX debut in December 2019.

The most surprising one among these 10 IPOs has been Uniti Group Limited, whose stock lost 14 per cent value on the first day of trading; however, it has delivered a massive return of about 649 per cent since it got listed on 13^th February 2019.

Moreover, at an issue price of $0.25, the Company’s share price, which trades at about $1.53 mark currently, is now up around 512%.

IPOs Cancelled in 2019

Though 63 companies succeeded to make ASX debut in 2019, there were some that decided to withdraw their IPO for some reason or the other.

One such firm was Latitude Financial Services, which was about to make its biggest Australian IPO of 2019, but could not make it as the Company’s owners - Deutsche Bank, US private equity firm KKR and Varde Partners decided to cancel the offering in October 2019.

The KKR consortium cancelled the offering owing to a large demand coming from hedge funds for Company’s shares, instead of long-term investors. This was the second attempt the Company made to list itself on the ASX.

Prior to this, the Company’s IPO was withdrawn in 2018 due to a management change and market conditions.

Another company that could not mark its ASX debut in 2019 was the Southeast Asian online realty company, PropertyGuru that intended to raise $380.2 million via IPO. Amidst ongoing uncertainty in the IPO market, the Company withdrew its IPO in October, regardless of strong investor support received from several leading global and Australian investors.

However, the news is doing rounds that the Company can again make an attempt to get listed in 2020 if market conditions remain favourable.

ASX-aspirant MPC Kinetic also pulled its IPO in October due to dissatisfaction among the Company’s owners over the quality of the book allocation. The Company was planning to raise $228.5 million at $2.50 a share via IPO, which was shelved later on amid weak investor demand after it repriced its IPO lower at $2.25 per cent.

In addition to these firms, private equity firm Bain Capital withdrew its IPO of Boost Juice owner Retail Zoo, providing a reason of weak IPO market conditions. Bain was seeking a $300 million-plus valuation as a part of float for its portfolio company.

On the global front, owner of office-sharing startup WeWork, the We Company scrapped its IPO last year as concerns surrounding the sustainability of its business model resulted in a lacklustre response from investors. Investors raised questions over the Company’s corporate governance arrangements and valuation, in addition to questioning over too much control given to its co-founder Adam Newmann.

Upcoming IPOs

Though last year displayed a mix set of results for IPOs on the ASX, a number of companies have tightened their belts to make an impression on ASX debut in 2020.

On 31^st January 2020, ASX-listed Cobre Limited (CBE) commenced trading on the ASX, with its share prices jumping by about 32.5 per cent on the first day itself. The Company managed to raise $10 million via a heavily oversubscribed IPO, which involved the issue of 50 million shares at 20 cents each.

In addition to CBE, three more companies have marked their entry into the ASX so far in 2020:

• Cosol Limited (COS): Listed on 24^th January 2020, delivered 90 per cent return on Day 1
• Happy Valley Nutrition Limited (HVM): Listed on 23^rd January 2020, delivered -25 per cent return on Day 1
• Nyrada Inc (NYR): Listed on 16^th January 2020, delivered 17.5 per cent return on Day 1

Below table summarises the list of companies that have planned to make ASX debut in 2020:

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