Record IPO year will be hard to match

Can the number of initial public offerings (IPOs) hitting the stock market keep going into 2015?

According to Dealogic data local floats are at a record this year with $US14.6 billion raised, more than double the $US5.8 billion that hit the market in 2013.

The sheer weight of IPOs, including health sector heavyweights Medibank Private and Healthscope, put Australia into fifth place on the world ranking. It is the first time since 2003 that Australia has held a top-five spot.

Total issuance, including raising for mergers and acquisitions and large block trades, amounted to $US34 billion.

But in the past two months, a number of deals have had to be resized and or repriced as fund managers started to suffer IPO-fatigue. Some floats also have proved to be a disappointment, including Vocation and more recently trading in Estia Health.

Despite this fall-off in sentiment Herbert Smith Freehills’ co-heads of equity capital markets. Philippa Stone and Michael Ziegelaar have told the Australian Financial Review they believe the window for more floats in 2015 remains open as long as overseas factors don’t weigh on the market too much.

However they caution that the 2014 record numbers are unlikely to be replicated.

Ms Stone also expects listings will happen across a range of industries and that secondary issuance – to fund acquisitions or shore up balance sheets – will be strong.

“Some industries are facing a need to recapitalise, whereas other clients are looking at acquisitions,” Ms Stone said.

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