We are happy to present our quarterly review of the mid-market IPOs on the ASX.
The focus of the analysis is on the current quarter and the immediately preceding 12 months with the aim of providing you with an overview of the current mid-market IPO activity.
In our analysis we have looked at IPOs that had an enterprise value of less than $200m at the time of listing. We have also provided some further detail on the cost of IPOs broken down by market capitalisation and the performance of IPOs occurring in the last twelve months by significant sectors.
Key highlights are:
- There were 19 IPOs for mid-market companies in the quarter, a decrease on last quarter but an increase on the same period last year as the market continues to recover after COVID 19.
- The mining related sectors were again the most active sectors in the quarter with 10 IPOs.
- Mid-market companies raised $309 million on the ASX in the quarter.
- The average IPO fundraising was $16.3 million, which is a 27% decrease on the previous quarter, and a 3% increase on the 12-month average.
- On average, transaction costs (excluding brokerage fees) decreased slightly by 2.4% to $0.37 million.
There were 19 IPOs in the mid-market this quarter, a 51% decrease from last quarter but a 138% increase compared to the same quarter last year.
Total funds raised in the quarter were $309 million, a 64% decrease from last quarter, but a 374% increase compared to the same quarter last year. The average funds raised per transaction this quarter decreased by 37% from $22.3 million last quarter to $16.3 million, however, it increased by 99% when compared to the same quarter last year. This quarter has seen the 12-month average funds raised per transaction increase by 3%.
The average enterprise value at IPO in the quarter was $52.7 million, which was down 11% from last quarter and up 73% from the same quarter last year.
There were 10 IPOs within mining related sectors, followed by 3 IPOs within consumer discretionary, 2 IPOs in healthcare and information technology sectors and 1 each in the industrials and communications sectors. There were no IPOs this quarter in the real estate, utilities, financials or consumer staples sectors.
Of the $309 million raised during the quarter, the mining related sectors recorded the highest value of funds raised at $177.6 million, followed by healthcare at $41 million and consumer discretionary at $38 million.
We have analysed the number of IPOs and average fund raising per sector over the last quarter in order to better understand the activity in each sector.
Mining related sectors were the most active sectors with 10 IPOs and average funds raised of $17.76 million per transaction.
The communications sector had only 1 IPO in the quarter however the average funds raised was the highest of all sectors at $22.46 million per transaction, followed by consumer discretionary which had average funds raised of $12.67 million and 3 IPOs.
The information technology and industrials sector had average funds raised of $10 million and 2 and 1 IPOs respectively.
There were no mid-market IPOs in the utilities, real estate, financials and consumer staples sectors during the quarter.
Mining related sectors were the most volatile sectors with a spread of returns of 81% and negative average returns of 9%.
All other sectors where slightly less volatile with negative average returns, except communication services which had positive average returns of 18%.
Certain costs in undertaking an IPO, being accounting and legal costs, are typically fixed regardless of the outcome. Fundraising costs, on the other hand, are generally paid on successful completion of the IPO and represent a percentage of proceeds raised. Accordingly, fundraising costs have been excluded from our analysis.
A number of factors will impact the costs incurred, including how prepared the company is for the IPO, the complexity of its business and whether there are any related transactions. Over the last year, the fixed costs for an IPO have averaged $373,818 compared to $383,057 for the corresponding 12-month period in the prior year.
The analysis was prepared based on data sourced from S&P Capital IQ. Data analysed is for completed IPOs on the ASX, from 1 January 2021 to 31 March 2021, with an implied enterprise value of less than $200m. If no implied enterprise value was disclosed at the IPO filling date, transactions were adjusted to be the first enterprise value disclosed within the preceding 90 days.
Of the 39 transactions analysed for transaction costs there was sufficient data for 100% of the transactions to calculate the average accounting fees per transaction and there was sufficient data for 100% of the transactions to calculate the average legal fees per transaction.
If you would like to discuss further any of the information provided in this report and how it may impact you, please contact your Nexia Advisor.