There were 85 new initial public offerings (IPOs) on the ASX during 2015, raising $7 billion among them. While individual performances varied, the average increase in share price across all new IPOs in 2015 was 10%, which compares with the S&P/ASX 200’s 2% decline over the year.
In all, 69% of companies logged first-day gains in 2015, which was up from 55% in 2014.
The past two years have been very different in terms of the type, scale and value of IPOs and this diversity is expected to continue. Although market volatility may affect the pipeline, IPO activity was looking healthy at the beginning of the year, with 20 companies planning to list. Although mining dominated the IPO scene previously, this sector will continue its decline, to be replaced with an increasing representation among technology, software and start-up industries. Service industries will also play a larger role – a trend that emerged in 2015.
Tips for IPO investors include:
• Align with your broker– they can provide good opportunities to invest in the IPO market.
• Research. Although there were some very good performers last year, some companies experienced significant losses. Make sure you understand the risks.
• Access. Participating in some IPOs can be difficult. Through a company such as OnMarket BookBuilds, individual investors can access research and participate in IPOs via a website or app.