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IPO returns reflect market strength

Impressive Australian initial public offering (IPO) returns in May pointed to a strong IPO market for 2016, according to OnMarket BookBuilds. 

According to the stock market listings and placements platform’s “April/May IPO Report 2016”, during the month of May, companies listing on the Australian Securities Exchange (ASX) delivered strong gains of 9.4 per cent, following on from a 39.4 per cent gain in April.

OnMarket BookBuilds chief executive Ben Bucknell said the data highlighted the impressive returns IPOs were delivering to investors this year.

“This reflects a very healthy 2016 Australian IPO market and adds to the impressive IPO performance in 2015, when the average return on the 93 companies that listed on the ASX was 23 per cent,” Bucknell revealed.

“All up, 25 companies had listed on the ASX by 31 May, and while that was the same number as last year, the returns for the year to 31 May 2016 were higher at 24.7 per cent compared to gains of 11.2 per cent for the same period in 2015.” 

The boost in IPO returns could be attributed largely to technology company Afterpay Holdings, which soared 49.5 per cent over the month, he said.

Other strong performers included Shark Mitigation Systems, returning 7.5 per cent to 31 May after a 12 May listing, chicken producer Tegel Group, listing at $1.55 and raising $299 million, and WiseTech, which had jumped 30.5 per cent by 31 May after listing on 11 April.

The biggest IPO so far this year is that of $1.3 billion plumbing manufacturer Reliance Worldwide Corporation, whose stock was up 25.2 per cent as at 31 May following a 25 April listing.

“Australia’s IPO market now offers good exposure to a broad range of companies, with more technology and finance companies listing these days, taking over from the resources sector, which dominated 10 years ago,” Bucknell said.

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