DELOITTE: IPOs outperformed the Australian market in 2014 by a big margin last year

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The Australian market absorbed a bumper crop of local IPOs in 2014, raising $26 billion in equity through 74 floats, and returning an average of 17% to those lucky enough to be allocated shares.

According to analysis by Deloitte, in its Surf’s up: 2015 IPO report, last year’s value total exceeded capital raisings for the previous three years combined.

The biggest, of a size not seen for many years, was Medibank Private which raised $5.679 billion for the Federal Government. The health insurance company’s $2 shares were up 7% on listing day. At the end of December they were up 21% and yesterday the shares closed at $2.43.

And there’s a healthy pipeline of IPOs building for 2015, particularly for growth stocks in the technology and financial services sectors.

Ian Turner, Deloitte corporate finance partner, says conditions remain largely the same for 2015 and the early signs are that IPOs will continue to outperform the S&P ASX 200 index.

“However, under performance of certain IPOs, and re-pricing of others toward the back end of last year, does raise the question of whether the 2014 wave is sustainable,” he says.

In 2014:

  • Average 2014 year-end IPO returns of 17% significantly outperformed the S&P ASX 200
  • Healthcare and financial services accounted for 59% of listings
  • Energy and resources IPOs accounted for 14% of all IPOs in 2014, compared to 30% in 2013
  • Private equity achieved 17 exits valued at $11.5 billion, double that of 2013.

“Even though the interim reporting season hasn’t shot the lights out, the market indices are nearing levels last seen in 2008 and, based on Deloitte Access Economics macroeconomic analysis, there are few signs that prices are exaggerated,” Turner says.

“Activity will continue to be fuelled by low interest rates, a lower Australian dollar, strength in global equity markets, a willing queue of business owners keen to monetise their investments or pursue further expansion via listing, and a build-up of demand from institutions and superannuation funds.”

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