Notwithstanding the continuing macroeconomic and geopolitical risks, the current listings pipeline points to an increase in ASX IPO activity in 2024.
A mineral exploration company focused on uranium and gold in Western Australia (WA) and Argentina, Piche Resources (ASX: PR2), began trading on the ASX at 10:00am in faraway Western Australia on Monday.
Listing on the Australian Securities Exchange (ASX) under the ticker code PR2, the PR2 initial public offering (IPO) hauled in a total of $10mn (before costs) at $0.20 a pop, reportedly garnering an “excellent register of international & Australian funds, and high net worth and retail investors”.
The ASX has been doing a bit more of the same of late.
In the past six months there have been 15 IPOs including the listings of Canada’s Capstone Copper Corp (ASX:CSC) and US-based Metals Acquisition (ASX:MAC).
Aluminium allies – the Alcoa Corporation will join the ASX following its acquisition of Alumina (ASX:AWC).
Nine of the IPOs so far this year have been mining or mining-related companies, with uranium and lithium explorer Infini Resources (ASX:I88), up over 275% on its issue price and Sun Silver (ASX:SS1), which is developing a project in the US, rallying 175%.
CSC is up 13% amid a tepid metals and copper outlook.
Piche ended Day One down 22%.
Mega listings and the ASX
The local bourse remains a worthy destination for businesses both domestic and foreign seeking to access Australia’s monstrous superannuation fund pool, which is among the fattest out there, according to the Australian Prudential Regulation Authority (APRA) hoarding some $3.5 trillion in capital firepower.
Notwithstanding the continuing macroeconomic and geopolitical risks, the current listings pipeline points to an increase in ASX IPO excitement over the next six months and beyond.
That’s good. It’s been pretty quiet.
Most recently we had Guzman y Gomez (ASX:GYG), which initially rallied after Morgans initiated with an Add recommendation.
Having IPOed at $22, they opened at $30 and traded as high as $30.99, before hitting a $24.04 low the following Monday.
The thinking appears to be maybe not GYG unless it moves below $20.00.
Otherwise, the cupboards have been bare for the best of a few years amid inflation, higher interest rates and generally untoward business conditions.
Here’s a bit of a recap…
Redox (ASX:RDX) was the ASX’s largest IPO last year, raising $402 million and a market cap of $1.3 billion at its initial listing exactly one year ago.
The family-owned chemical and ingredient distributor – listed to achieve liquidity for the family, which sold down 30% of the company – raised growth capital for offshore expansion.
The spin-off of Storage King from Abacus Property Group into Abacus Group (ASX:ABG) in August saw $225 million in capital raised at a valuation of $1.8 billion.
In October, Nido Education (ASX:NDO) raised $99 million in IPO capital for a $220 million market capitalisation.
Wait. Here’s the ASX on what we’ve missed…
The Piche niche
With the ASX IPO now done, Piche says the new capital will be used to advance drill ready tier 1 exploration targets in Australia and Argentina, where the company intends to accelerate exploration activities on three targets at the Ashburton Project in Western Australia, and at Sierra Cuadrada and Cerro Chacón in Argentina as well as working capital requirements.
Pre-IPO funds have been applied to progress land tenure, community engagement, land access agreements and prepare for the imminent drilling campaign at both Sierra and Ashburton projects (uranium) and Cerro Chacón (gold) as well.
Importantly, Piche says the majority of funds raised will be allocated to exploration of its key uranium and gold projects.
“Piche’s immediate attention will be at the Ashburton Project in WA, where previous drilling in the 1980s delivered high-grade uranium from the Angelo River Prospect.
Piche will also be looking to replicate historical drilling results to assist in driving a JORC Resource estimate at Angelo River.
Further out, PR2 wants to build a “significant mining group with separate uranium, gold, and base metal companies under its banner, capitalising on an improving commodity market.”
Going local from global for IPOs
The second half of 2023 saw a re-opening of the global IPO market, particularly in the US, where several companies crossed the US$1 billion valuation threshold in their market debuts.
High-profile companies such as Instacart, Birkenstock, and Klaviyo made their mark, and the largest IPO of the year – British chip designer Arm – achieved a US$54.5 billion valuation, raising US$5.2 billion. Nevertheless, an October market downturn led many companies to defer their IPOs, awaiting more conducive market conditions.
The ASX saw $1.1bn of IPO capital raised across 45 listings last year, versus ASX’s five-year average of $5.4 billion raised and 120 listings a year.
The total quoted market capitalisation from all new market entrants in 2023 including IPOs, demergers, dual and direct listings was $33.7 billion, up eight per cent on 2022 numbers.
According to the ASX, while the IPO market was relatively quiet in 2022 and 2023, the ASX has seen around $1 trillion in additional capital quoted on the market over the past 10 years, including from new listings, follow-on offerings, and other capital raised.
The most significant listing by value was the dual listing of American mining titan Newmont Corporation (ASX:NEM), which followed its Newcrest acquisition.
The listing placed $20 billion in CHESS Depositary Interests (CDIs) on the ASX, increasing Newmont’s total market capitalisation to approximately $68 billion. This transaction solidified Newmont as the world’s leading gold and copper company, comprising 17 operations across nine countries, building on its commitment to sustainable and responsible mining.
Other dual listings included Nasdaq-listed US-based gaming business Light & Wonder (ASX:LNW) and NZX-listed NZ-based logistics company Freightways (ASX:FRW), with valuations at listing of $8 billion and $1.4 billion respectively.
Following its listing LNW entered the S&P/ASX 200 benchmark, further driving liquidity in the stock which ended the year with a market capitalisation of $10.9bn.
The year closed with the $11 billion merger and dual listing of Livent and Allkem, forming Arcadium Lithium (ASX:LTM) and establishing it as a top-three global lithium chemicals producer.
While numerous anticipated listings in sectors ranging from consumer discretionary to industrials chose to wait out 2023’s uncertainty, there was an increase in M&A deal value in Q4, according to Dealogic.
The key transaction here was Sigma Healthcare (ASX:SIG) announcing a merger with the Chemist Warehouse, poised to create a $8.8 billion ASX listed heavyweight, pending some breakthrough in regulatory approval, with completion eyed for the second half of 2024.
There has been A$750 billion of new capital quoted on ASX over the past seven years, including new listings, secondary and other capital raising.
Over the same period, there has been $441 billion in net new capital quoted, after factoring in de-listings of $309 billion.
In each and every year, there has been net capital added on to ASX, even though some years saw a net decrease in the number of listed companies.
That trend has continued in calendar year 2024 and for the five months to the end of May there’s been a net new capital of A$7 billion added
Takeovers accounted for approximately 94 % of the delisted value over the past seven years.
However, it’s worth noting takeovers have also recycled capital back onto ASX, either by an ASX company being the acquirer, for example BHP acquiring Oz Minerals (A$9 billion) or overseas examples resulting in dual listings back onto ASX; such as Newmont’s (ASX:NEM) takeover of Newcrest and Arcadium.
According to our mate at The Australian, Matt Bell, as of June 30 there are more than 230 foreign listings on the ASX.
Breaking that down, there’s an outrageous 60 from New Zealand, some 45 US companies and 18 from Canada. Canadian listings and dual-listings are on the rise.
Singapore, UK and Israel also have a strong presence on the ASX, the best large cap examples being names like, ResMed (ASX:RMD), and Newmont Corporation (ASX:NEM).
Now read Josh Chiat’s closer look at what’s next for Aussie IPOs > here.
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