A DELOITTE corporate finance survey has found a recovery in stock market floats in Western Australia during the past financial year, although the annual data disguises a slump in activity in recent months.
Market volatility, the proposed carbon tax and general negative investor sentiment have been cited as reasons for companies’ recent hesitation to list on the ASX.
The subsidiary of WA-based Golden West Resources, Western Gold, withdrew its $7 million initial public offering last month after failing to reach a minimum subscription, which it attributed to a combination of the above factors.
Underground mining contractor Barminco also recently deferred the launch of its $600 million-plus IPO due to volatile market conditions.
However, the survey showed that WA produced 63 IPOs in the year ending June 30 2011 (FY11), almost double the 33 IPOs in the previous financial year.
The value of funds raised through IPOs also increased sharply, up from $266 million to $604 million.
The top WA IPO for FY11 was from coal mining company Blackgold International, which raised more than $70 million.
Mining and civil services contractor Maca, McPherson’s Reward Gold, GR Engineering Services and PMI Gold Corporation made up the top five WA IPOs for FY11.
Deloitte Corporate Finance partner Andrew Annand said WA generated more IPOs than any other state in 2010, and accounted for five of the 10 best-performing floats, led by the resources sector.
Across the country, the Deloitte Corporate Finance IPO survey shows that FY11 produced 123 floats, almost double the number in the previous financial year.
The value of funds raised from investors has also climbed strongly, up from $4 billion in FY10 to $7.6 billion in FY11, however, Mr Annand said the strong-looking numbers belied a disappointing second half of the year for IPO activity.
“The value of funds raised reflected two big-value floats earlier in the year of QR National and Westfield Trust, which together raised almost $6.1 billion,” he said.
“The number of floats was boosted by activity in the resource sector, which produced 95 IPOs, or almost 80 per cent of all the floats for the year.”
Mr Annand said the successful listing of Queensland Rail in particular raised expectations for the IPO market in the new year, however the market overall failed to live up to these expectations, with many businesses foregoing a listing, often in favour of a trade sale.
