The Australian Market Is Smashing IPO Records: Here Are The Hot Sectors

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In the first nine months of 2014, the Australian market has seen 44 IPOs raising a total US $8.514 billion.

This already equals the volume of IPOs for 2013 and well exceeds the total US $5.368 billion raised during 2013, according to the latest quarterly EY Global IPO Trends report.

The 2014 year to date tally includes 20 IPOs in the three months to the end of September which raised US $3.306 billion.

Global numbers tell a similar story with 851 IPOs raising US $186.6 billion in the first nine months of the year, a 49% increase in volume and 94% increase in proceeds compared to the same period in 2013.

After a quiet August, in which some US-bound companies waited in anticipation of the record-breaking Alibaba listing, the third quarter posted 260 IPOs, raising US $67.1 billion, up 29% and 162% respectively on Q3 2013.

EY Oceania Transaction Support Leader Gary Nicholson says the September quarter IPO numbers for Australia reflect the positive sentiment fuelling the broader market, including IPOs.

“Investors are hungry for the right businesses that are fairly priced,” he says.

“The IPO pipeline is very strong right through until the end of November, so we would expect the fourth quarter to be even stronger.”

EY expect an uptick in the number of small cap businesses seeking a listing on the ASX in the next 12-18 months, as business owners look to take advantage of better conditions.

However, Nicholson says the headline IPO numbers don’t tell the full story.

“There are specific sectors that are particularly hot for IPOs – aged care, health, financial services and technology,” he says.

The $2.25 billion ASX listing by Healthscope is the largest listing in Australia and the 10th largest IPO globally so far this year.

Overall, a combination of good corporate earnings growth and a lack of alternative investment options mean that risk appetite is focused on equities.

Global IPO activity this year could be the strongest since 2007 and the start of the GFC.

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