IPO market up 44% for 2014 but SurfStitch disappoints on debut
Wednesday, December 17, 2014/
In a sign of market confidence, the number of Australian businesses undertaking initial public offerings in 2014 soared.
EY recorded 75 IPOs in Australia this year raising $US16.04 billion ($A19.4b).
This includes actual listings up until 4 December 2014 plus expected listings for the remainder of the year.
The number of IPOs dwarfs last year when there were only 52 IPOs raising $US5.4 billion.
It marks a 44% increase in the number of IPOs in Australia in 2014 compared to 2013, and a nearly three-fold increase in total proceeds.
The Australian market also reflects an uptick globally with 1206 IPOs raising $US256.6 billion over the course of the year.
This was a 35% increase in the number of IPOs and a 50% increase in total proceeds.
Globally 2014 was also the best year for IPOs since 2010 in terms of proceeds and volume.
But it wasn’t all smooth sailing, with online surfwear retailer SurfStitch recording a choppy sharemarket debut yesterday.
SurfStitch shares debuted at 98 cents before falling as low as 94 cents and later rebounding to close to $1, the price investors paid through SurfStitch’s $83 million IPO.
The IPO valued the retailer founded in 2007 by Lex Pedersen and Justin Cameron at $214 million.
EY partner Gary Nicholson told SmartCompany 2014 has been “significantly stronger” than 2013 both in terms of the number of IPOs and dollars raised.
“There still continues to be very strong institutional and retail demand for stocks,” he says.
“On the supply side we continue to see people looking to the market for fresh capital, growth, and as an exit mechanism.”
Nicholson says EY expects 2015 to be on a par with 2014 in terms of volume with sectors including health, aged care and technology as the ones to watch.
While Nicholson could not comment on SurfStitch’s IPO, he says there needs to be a “degree of caution” to ensure stocks are not overpriced.
He says a sharemarket debut at the wrong price can result in some backward movement in the first week or so.
“The lesson people should take going to market is to ensure they don’t push the opening price too far,” Nicholson says.
“If you push the price too far and then the price retreats it can take a while to get investor confidence back. It’s always best to take a more conservative view.”
Q1: 6 IPOs, US$1.2 billion
Q2: 17 IPOs, US$4.0 billion
Q3: 18 IPOs, US$3.3 billion
Q4: 34 IPOs, US$7.5 billion