The failure of Pankaj Oswal's Burrup Holdings Ltd to appear on the stock market failed to put a dampener on Western Australian companies' enthusiasm for going public, largely defying a falling share market thanks to the resource boom.
The failure of Pankaj Oswal's Burrup Holdings Ltd to appear on the stock market failed to put a dampener on Western Australian companies' enthusiasm for going public, largely defying a falling share market thanks to the resource boom.
The twice-postponed $2.5 billion Burrup float was the ultimate victim of the turbulent times faced by companies over the 2008 financial year, with the first delay attributed to the volatile market conditions earlier this year and the state gas crisis playing a hand in the second.
While its absence was felt on the total value of funds raised by WA floats for fiscal 2008, which dropped from $1.8 billion in 2006-07 to $1.3 billion, the decline was considerably smaller compared with the national downturn.
According to Deloitte, which this week released preliminary figures from its Annual IPO Report for 2007-08, the value of funds raised nationally fell by 44 per cent compared with the state's 28 per cent.
Had Burrup gone ahead with its public offer, which was looking to raise $500 million, WA would have broken even.
Overall, nearly 200 companies across the country decided to go public over the year, with WA contributing about half of that.
In line with national trends, the number of WA companies listing dropped from 113 to 96, with most of those floating in the first half of the 2008 financial year.
More than 30 companies listed during the September quarter, while nearly 40 decided to make it before the close of the 2007 calendar year. However, over the March quarter, 15 companies braved the market's tumultuous ride, while that figure fell to 13 during the June quarter.
While the number of companies floating on the bourse trickled out, WA's IPOs produced better share price performances, with an average share price gain of 15 per cent compared with the national average of 3 per cent.
According to data compiled by WA Business News, 57 companies closed the financial year below their issue price, compared with 37 that ended the year higher.
Investment company Ozgrowth Ltd and resource company Eagle Nickel Ltd closed at their 20 cent and 30 cent issue prices respectively.
Breaking it down sector-by-sector, 67 of the WA companies to list were on the hunt for hard minerals, while five were classified in the oil and gas sector and four in the mining services sector.
According to a PricewaterhouseCoopers' analysis of non-resource companies floating in the first half of the 2008 calendar year, up till June 25, non-resource companies accounted for about 50 per cent of activity, up from 10 per cent recorded last year.
Overall, 10 non-resource companies listed, raising a total amount of $98.3 million, which was consistent with the previous year's three floated companies that raised $94 million.
However, PwC head of corporate finance Angel Barrio noted an increase in IPO's raising under $10 million.
"The increase in floats raising under $10 million probably suggests two things - the credit crunch in debt markets has forced smaller companies in desperate need of funds to look elsewhere for their capital raising needs, and listing has offered better pricing than the private equity market," Mr Barrio said.
"Given the performance of these companies since listing, it will be interesting to see if this number continues to hold up, particularly if market conditions continue to deteriorate as they have done so far this year."
