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 35 IPOs for mid-market companies in the quarter, an increase on last quarter and 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 22 IPOs.
- Mid-market companies raised $442.8 million on the ASX in the quarter.
- The average IPO fundraising was $12.7 million, which is a 1% decrease on the previous quarter, and a 25% decrease on the 12-month average.
- On average, transaction costs (excluding brokerage fees) decreased by 23% to $0.31 million.
There were 35 IPOs in the mid-market this quarter, a 94% increase from last quarter, and a 1650% increase compared to the same quarter last year (Q4 2020), which is when the market was heavily impacted by COVID-19.
Total funds raised in the quarter was $442.8 million, a 92% increase from last quarter, and a 2954% increase compared to the same quarter last year due to COVID-19. The average funds raised per transaction this quarter was down by 1% from $12.8 million last quarter to $12.7 million, however, it increased by 75% when compared to the same quarter last year.
This quarter has seen the 12-month average funds raised per transaction decrease by 10%.
The average enterprise value at IPO in the quarter was $33.1 million, which was down 31% from last quarter and up 26% from the same quarter last year.
There were 22 IPOs within mining related sectors, followed by 4 IPOs within healthcare, 3 IPOs in industrials, and 2 in financials. The consumer discretionary, communications, utilities and information technology sectors all had 1 transaction each. There were no IPOs this quarter in the consumer staples sectors.
Of the $442.8 million raised during the quarter, the mining related sectors recorded the highest value of funds raised at $247.9 million, followed by healthcare at $114.5 million and industrials at $20.5 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 22 IPOs and average funds raised of $11.27 million per transaction.
The healthcare sector had 4 IPOs in the quarter however the average funds raised was the highest of all sectors at $28.63 million per transaction, followed by communication services which had average funds raised of $18 million with 1 IPO.
The utilities sector had average funds raised of $14 million and 1 IPO, the information technology sector had average funds raised of $11 million and 1 IPO, and the industrials and consumer discretionary sectors had average funds raised of $7 million with 3 and 1 IPOs respectively.
There were no mid-market IPOs in the consumer staples sector during the quarter.
Performance over the last 12 months
Mining related sectors were the most volatile sectors with a spread of returns of 82% and negative average returns of 5%.
The financials sectors was also relatively volatile with a spread of returns of 51% and negative average returns of 29%, followed by the healthcare sector with a spread of returns of 48% and negative average returns of 14%, and the financials sectors with a spread of returns of 28% and negative average returns of 10%.
All other sectors where slightly less volatile with negative average returns, except information technology which had positive average returns of 13%.
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 $313,004 compared to $366,839 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 April 2021 to 30 June 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 35 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.