Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Australia’s corporate regulator has moved to speed up the listing process to try to reverse the biggest slump in initial public offerings for more than a decade.
Only a few large listings have occurred on the Australian Securities Exchange in the past three years as companies have looked to private markets to raise funds. A larger number of companies have delisted as takeover activity has picked up.
Kicking off a regulatory review, the Australian Securities and Investments Commission said on Tuesday it would start a two-year trial during which it would informally review offer documents for companies looking to sell shares, prior to their formal filing.
That will speed up the IPO process by as much as a week and reduce the risk of regulatory intervention after the prospectus has been filed.
Joe Longo, chair of ASIC, has argued in recent months that the lack of IPOs does not suggest a structural issue with how Australia’s markets operate, but he has sought views on whether action could be taken to attract more companies to sell shares.
“Our [IPOs] are the lowest they have been in over a decade, and companies are delisting,” he said. “Greater deal certainty for companies should help deliver more IPOs, which means more investment opportunities so companies can expand.”
Burrito chain Guzman y Gomez, data centre landlord DigiCo Infrastructure and miner Mac Copper were the only companies with a market capitalisation of more than A$1bn ($650mn) to float on the ASX last year, and the miner is now the subject of a takeover bid. There has also been a dearth of smaller companies raising capital.
Despite the strong performance of Australian stocks — the S&P ASX 200 has gained more than 10 per cent in the past year, with large companies including Commonwealth Bank of Australia and Qantas hitting record highs this year — there has not been a rebound in the IPO market.
The only significant float lined up is Virgin Australia, owned by Bain Capital and Qatar Airways, which is due to list its stock on the ASX later this month.
Later this year, ASIC will release further plans to reform public markets, to be followed by its findings of a review of the large private markets sector.
