2021 recap: a record year for IPOs as cheap cash abounds

More than 200 listings have hit the ASX since the start of the year, with most – around170 -comprising initial public offerings (IPOs), while the remainder consist of stapled securities, secondary listings and debt listings.

In total, over $12bn of IPOs hit the Australian market. 

Over $4bn of that came in October alone, thanks to a huge $1.3bn listing by asset management firm GQG Partners. The mega listing vaulted the company into the ASX 100, although at the time of writing, GQG has an ASX rank of 110. 

"This is a record year by number of listings since 2007, and it's also a record year in terms of capital raised since 2014," says Max Cunningham, group executive of listings at the ASX.

How have these new companies fared?

Of the newly listed companies, 41% are trading above their issue price, 6% are trading flat, and 53% are trading below their issue price. 

Copper, nickel, and cobalt explorer Kuniko (ASX: KNI) was the biggest gainer, up 406.25% since listing in August. 

They were followed by Argenica Therapeutics (ASX: AGN), which has gained 250% since the company’s June launch. The company is developing neuroprotective therapeutics to reduce brain damage after strokes.

Lithium Energy (ASX: LEL), Global Lithium Resources (ASX:GL1), and DGL Group (ASX: DGL) rounded out the top 5 biggest IPO gainers:

• Lithium Energy posted a 237.5% gain 

• Global Lithium Resources jumped 215%

• DGL Group leapt 176%

All three companies listed in May. 

Why have there been so many IPOs this year?

Put simply: cheap cash.

With low interest rates leading to unattractive returns through bank accounts, share markets have been popular with Australian investors this year.

More than one million new retail trading accounts were opened in 2021. This is a 67% increase from 2020, which saw around 600,000 new retail investors join the market.

Wilsons' head of investment strategy, John Lockton, also says that Australia has attractive structural factors for new companies. 

“Undertaking an IPO in Australia allows companies to list at an earlier stage than other public markets and if you look at the types of companies listing, a lot are concept type stocks, so they’re pre-profit and in some cases pre-revenue,” says Lockton.

Will the trend continue in 2022?

The IPO frenzy does not appear to be slowing as we move towards the new year. 

15 companies are already gearing up to go public in January.

You can always see a list of Upcoming IPOs on Market Index’s homepage. (Just scroll down to the ‘Upcoming IPOs’ section.)

IPOs of interest include Before Pay (ASX: B4P), which will list mid-January with a $35m IPO. Initial market reaction suggests there may be sufficient demand to attract those looking to tap into what many hope could be another BNPL darling stock like Afterpay (APT).

2022 will also begin with the biggest listing in ASX history when Block (formerly known as Square) (NYSE: SQ) lists as a result of the company’s $39bn Afterpay (ASX: APT) takeover.