Deloitte’s annual IPO report 2006-07
A resource-led IPO boom in the latest financial year produced extraordinary share price gains for many investors, overshadowing some of the best returns of the dotcom boom of 1999-2000.
Preliminary figures for Deloitte ’s Annual IPO Report 2006-07 found a record 226 IPOs were set to list by 30 June, up by 34% from 169 in the previous year.
The total value of funds raised is set to decrease by 20% from $13.2bn to $10.6bn, due to a drop in the number of +$1bn IPOs from four to one.
The average share price gain was 89%, up from just 24% in the previous year, reflecting the strong returns from the resources sector in the year. However, the average return for all floats over $100m, representing approximately 75% of all funds raised, was more modest at just under 10%.
The odds of being among the winners also improved, with 75% of all IPOs trading at or above their issue price by the end of the year, compared to 54% the previous year.
According to Deloitte Corporate Finance partner, Steve Woosnam, the latest financial year would be remembered as a year of some extraordinary share price gains.
One in every five IPOs rewarded investors by at least doubling their money, while seven IPOs produced returns of more than 500%.
The 10-best performing IPOs were all in the resources sector and averaged a 764% increase. This compares to the dotcom era where the average return for the 10 best performing IPOs in 1999-2000 was 500%.
Woosnam said the average performance of the 10 big IPOs of the year improved, up from minus 2% last year to 6% in the current year.
This reflected a strong performance by the year’s large IPO, Boart Longyear, which rose by 22%, while Platinum Asset Management (up 47%) and AMP Capital China Growth Fund (up 23%) were other strong performers among the top 10 by size.
Woosnam said it has been a strong year for IPOs despite competition from trade players and deal hungry private equity funds.
The dual track process of realising investments was now commonplace in the market and they expect a continued flow of substantial companies to seek listings in 07-08 boosted by strong economic conditions.
At the small end of the market which is dominated by resource exploration companies, the forecast depends largely on the outlook for commodity prices. However, barring a collapse of economic activity in China, we see no reason for the boom in resource IPOs to come to an end in the near term.
10 biggest IPOs:
The 10 biggest IPOs for the year were a diversified mix of companies, mainly from the capital goods, diversified financials and real estate sectors. This is in contrast to the previous year, which was dominated by utilities.
The biggest IPO for the year was Boart Longyear ($2,364m), followed by Emeco ($942m), Rivercity Motorway ($724m), Platinum Asset Management ($561m) and Magellan Flagship Fund ($348m).
The 10 biggest IPOs raised a total of $6.4bn or 60% of all funds raised. This was down from 71% in the previous year.
Platinum Asset Management was the best performing IPO of the ten large (up 47%), followed by the $280m AMP Capital China Growth Fund (up 23%). The IPO of Boart Longyear also performed strongly (up 22%). At $2.4bn, Boart Longyear was the large public float since Telstra 1 a decade earlier.
The full Deloitte IPO Annual Report 06-07 will be available in early July on its website.
27-Jul-2007