The Australian IPO market is unlikely to improve any time soon as evidenced by the announcement from TRUenergy that it would not proceed with its IPO this year. Lawyers in the sector concur that it is still one of the worst IPO markets Australia has had for a long time. “The Calibre IPO (A$75 million) is the biggest so far this year, what we need is a few more to be successful before we start thinking that the IPO market is open,” said Gilbert + Tobin partner, Peter Cook, who advised the underwriters of the Calibre IPO.
While Cook says the market is definitely not dead, he admits trading conditions are difficult. “The IPO market is showing some sign of life,” he said. “The announcement by TRUenergy doesn’t help, but they have not cancelled it, they have said they are waiting for the market to return.” The announcement by CLP Holdings that the flagged float of up to 40 percent of TRUenergy was delayed until next year could also mean opportunities for the IPO market according to Cook. “The fact that it is not going ahead this year may create opportunity in the market for other IPOs,” he said. “If there are another couple of IPOs that make it to market that might increase investor confidence.”
King & Wood Mallesons partner Shannon Finch says that the TRUenergy announcement is disappointing for those in the market who had hoped its IPO would break the market open, but it is was not the only silver lining. “The IPO pipeline is quite strong, but I don’t think many of them were aiming for this year,” she said. “There might still be one or two IPOs this year, but I think a lot are waiting until next year.”
IPO’s that have made it to market this year have been at the smaller end of the market, around the A$50 million mark. “Smaller deals generally have been going pretty well,” said Finch. “I don’t think the market has gathered a lot of hope around those deals, but at the same time I don’t think the market has been too rough on them either.”
As with Cook, Finch expects the IPO market to improve when general commercial sentiment improves and there is a drop in global market uncertainty.
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