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Initial Public Offering (IPO) is a process, under which private firms go public by issuing shares to the general public. It is not necessary that the company going public is a new entity. Companies that are old also launch their IPO to raise capital. Going public indicates that the company has the capability to grow and hence require additional funds.
IPOs often attract huge funds, allowing the company to inject the funds raised towards boosting their operations, expanding into new markets, working on new products/services etc. Again, there is no thing such as a free lunch. The IPO process involves a lot of hard work, diverting the company leaders from their business. This can impact their profits. Also, one major disadvantage of IPOs is the owners can’t sell their shares, reason being selling would mean giving away the part of their ownership and voting rights. Moreover, public companies go through intense scrutiny from various regulatory agencies.
During 2019, we witnessed a fall of 1.93% in listed entities from 2284 to 2240. As per ASX, the local initial public offering market went down by more than 20% to reach around $6.5 billion in 2019. On the global front, IPO market was down by 12% on a year on year basis. Despite this fall, technology stocks signified the highest number of listings, roughly 90 on the ASX in 2019.
Recently, the Australian Stock Exchange announced that it is planning to create a S&P/ASX, All Technology Index from February, and would promote a few companies to list in the upcoming year. When this news came out tech stock index soared up. Moreover, this is expected to prove out to be a sound alternative, giving more options to the investors. A handful of companies have already announced their plans to join the Australian Stock Exchange.
On the global front, valuations and share prices have been higher, but many have boiled down due to trade war in the two major economies. Many companies, however, were reluctant to enter the market. Still a wave of high-profile listings is expected in FY20.
Let us have a look at some of the upcoming IPOs on the ASX (Australian Securities Exchange).
Castile Resources Ltd
Castile Resources Ltd is engaged in the mineral exploration and development business in NT (Northern Territory). The company is set to get demerged from its parent, Westgold Resources Limited, and in order to operate as an independent entity and carry out its exploration and development operations, it plans to issue ordinary fully paid shares for a consideration of $0.20 per share. The minimum and full subscription under the offer is 55 million and approximately 99.84 million shares, to raise $11 million and nearly $19.97 million before costs, respectively. The offer is scheduled to close on 10 January 2020. The underwriter for the company is Canaccord Genuity (Australia) Limited.
Proposed ASX code: CST
Proposed listing date: 29 January 2020
Cobre Limited
Cobre Limited, which is primarily engaged in exploration of base metal projects in Western Australia, is planning to issue 50 million fully paid ordinary shares for a consideration of $0.20 per share. The company is proposing to raise $10 million. The offer was expected to close on 6 January 2019.
Proceeds from the offer would be directed towards drilling, geophysics and geological studies, targeted towards progressing the company’s Perrinvale Project. The company would use the funds for exploration program at the the Sandiman Project as well as for meeting ongoing working capital requirements.
Proposed ASX code: CBE
Proposed listing date: 15 January 2020
COSOL Limited
COSOL Limited is a global, professional enterprise asset management services provider, which is planning to raise $12 million from an issue of fully paid ordinary shares, for a consideration of $0.20 per share. The underwriter of the company is Euroz Securities Limited.
Proposed ASX code: COS
Proposed listing date: 24 January 2020
Emerald Clinics Limited
Emerald Clinics Limited manages a network of specialist medical clinics and uses purpose-built software and technology to collect clinical data from patients (informed and consenting). The anonymised data is commercialised as clinical proof.
The company is planning to raise a minimum of $6 million and a maximum of $8 million (before costs) by issuing at least 30 million shares and up to 40 million shares at a consideration of $0.20 per share, respectively. The offer is expected to close on 17 January 2020.
Funds raised would be directed towards the operation and expansion of the clinics. Moreover, the company would use the funds for data platform development, general administration fees and working capital.
Proposed ASX code: EMD
Proposed listing date: 7 February 2020
Kaiser Reef Limited
Junior exploration company, Kaiser Reef Limited is engaged in the development and exploration of the project targeted towards the substantial scale of gold mineralisation in New South Wales. The company is planning to raise $4,500,000 from the issue of around 22.5 million fully paid ordinary shares at a consideration of $0.20 per share. The offer is expected to close on 7 February 2020. More details can be read here.
Proposed ASX code: KAU
Proposed listing date: 27 February 2020
thedocyard Limited
thedocyard Limited is a cloud-based deal space built specifically for managing the entire lifecycle of any corporate or commercial transaction.
The company is planning to raise $5,000,000 by issuing ordinary fully paid shares at a consideration of $0.20 per share. The offer is likely to be sealed on 31 January 2020.
The funds raised would be directed towards expanding the sales and marketing and customer acquisition operations of the company.
Proposed ASX code for thedocyard: TDY
Proposed listing date: 14th February 2020
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