In this publication we cover:
- some key IPO themes of 2018;
- IPO activity across the Australian market;
- insights on the choice between an IPO and a demerger;
- Australian regulatory developments;
- key US securities developments; and
- predictions for 2019.
SOME OF THE KEY THEMES OF 2018 INCLUDE:
REFLECTIONS ON 2018
The 2018 IPO pipeline looked promising, but volatile markets and a complicated regulatory and political backdrop saw a number of highly anticipated listings postponed, while other IPO prospects were instead agreed to be sold via trade sale. On the upside, successful listings of larger mining companies suggests that Australian investors are receptive to new large resources stocks once more.
PUBLIC M&A LEAVES THE FIELD OPEN
2018 saw the acquisition and delisting of a number of large ASX listed entities. By some accounts, this raises hopes for prominent new listings to fill the gap in the market’s diminished top end.
REGULATORY FOCUS ON CAPITAL RAISING PRACTISES
Capital raising practises were under scrutiny in 2018 with ASIC’s new guidance on sell-side research coming into effect and ASIC releasing the results of its survey on allocation practises.
THE BANKING ROYAL COMMISSION’S IMPACT ON FINANCIAL SERVICES ISSUERS
The publication of the Financial Services Royal Commission’s report and the swift response by the Coalition and Labor give a measure of clarity as to its possible implications. However, the extent to which the Commission’s recommendations will be acted on and litigated, as well as the timing of any legislative changes, remains unknown.
ASX LISTING RULE REFRESH
In November 2018, ASX released a consultation paper with a range of proposed changes to the ASX listing rules for existing and prospective issuers with the objective of simplifying, clarifying and enhancing the integrity and efficiency of the rules. Consultation concludes on 1 March 2019 and the changes are anticipated to take effect on 1 July 2019.
2019 LAUNCH PAD
We can expect another year of market volatility in 2019. However, with some macroeconomic commentators saying the market is being too pessimistic and strong M&A activity in recent years resulting in a dwindling number of larger ASX listings, the market may become receptive to opportunities to invest in IPOs of established businesses with a sound and sustainable model.
The following predictions outline what we can expect from Australia’s capital markets in 2019:
- The impact of Brexit, Australia’s federal election and China/US trade tensions will see market volatility continue, especially in the first half of the year.
- 2019 is shaping up as a classic IPO year where IPOs occur in the second half.
- Globally, the tech sector will dominate large IPOs.
- ASIC and ASX will both take a tougher regulatory stance – issuers and advisors will need to plan for, and pre-emptively address, key regulatory concerns.
- As financial markets continue to globalise, further regulatory globalisation in 2019 is likely.