- The month of July witnessed a surge in IPO activities, with around 30 companies being listed on the ASX.
- Till June this year, only 40 companies had got listed.
- Companies are racing to go public to cash in on booming stock prices and extremely loose monetary policy.
- Some big players such as PEXA Group, Aerison Group, 29Metals, BlueBet Holdings made their debut on the ASX this month.
After starting the year on a sluggish note, the Australian IPO market has gained momentum in the last two months with a long list of companies launching their offers to make their debut on the domestic stock exchange. While last year, several tech companies took the IPO route, this year has seen a mixed bag including miners, financial players and healthcare entities.
Till June this year, there had been only 40 IPOs. But, in the last two months there seems to have been a flood of new issues hitting the market.
The month of July is proving to be the busiest month for the IPO market, with around 30 companies being listed on the Australian Securities Exchange. While 28 firms have already joined the ASX, two companies, including East 33 and M3 Mining, are slated to make their debut on the domestic bourse this week.
What is astonishing is that the Australian financial market is witnessing a surge in IPO activities despite business uncertainties caused by the COVID-19 pandemic and inflation woes. The market is seeing an increased interest from companies across sectors looking to raise capital, making Australia one of the hottest IPO markets.
One must wonder why so many companies are looking to go public at a time when Australia’s economy is facing uncertainties arising from the COVID-19 pandemic?
According to market experts, there are several factors that have played a key role in the revival of the primary market.
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Firstly, companies are racing to go public like never before to cash in on booming stock prices. Many firms had postponed their listing plans, waiting for a recovery in the stock market. Now, with a sharp turnaround in the stock market, companies are rushing to make most of the opportunity. The ASX has witnessed a sharp rally in recent months, scaling new highs on the back of improved market sentiments amid acceleration in economic activities.
Secondly, the timing of IPOs are also aligned to an extremely loose monetary policy which injected surplus liquidity in the market. The Reserve Bank of Australia has kept the official cash rate on hold at a historic low of 0.1% to mitigate the economic impacts of the COVID-19 crisis.
Thirdly, companies are also going public to raise money to deal with economic uncertainty and to ensure their business models evolve and become stronger.
Fourthly, the successful listing of companies, such as PEXA, also gave a further boost to investor confidence and helped attract more companies to go public.
Upcoming IPOs on ASX this week
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East 33 Limited (ASX: ETT)
A rock oyster producer and supplier, East 33 will begin trading on the Australian Securities Exchange on 29 July 2021. The company looked to raise AU$32 million at an offer price of 20 cents per share. The company will use the capital to undertake a transformational growth program and to buy more oyster farms.
This is the second attempt by East 33 to get listed on the ASX after it rolled back its IPO plans last year, citing adverse market conditions. It is the largest vertically integrated Sydney Rock Oyster producer, processor and supplier in Australia.
M3 Mining Limited (ASX: M3M)
Metal and gold exploration company M3 Mining will join the ASX on 29 July 2021. The company had proposed to raise AU$4.6 million at 20 cents apiece in its IPO. The offer opened for subscription on 3 June and closed on 24 June.
Post listing, the company will focus on mineral exploration of resources opportunities, which can, in turn, deliver value and growth. The company also intends to focus on valuating and acquiring other resource opportunities that would be a strategic fit for the company and have the potential to deliver growth for shareholders. The company holds 100% interest in the Edjudina project as well as Victoria Bore project.
Meanwhile, in the first fortnight of July, nearly 20 companies commenced trading on the ASX, including some big names such as PEXA Group, Aerison Group, 29Metals, BlueBet Holdings. Some more players such as Aquirian, BCAL Diagnostics, NobleOak Life, Openn Negotiation, Victory Goldfields, Western Mines Group and Western Gold Resources joined the ASX later this month.