IPO activity to slow in first half of 08: Deloitte

The flood of initial public offers on the Australian bourse of recent times may be reduced to a trickle in the first half of 2008, as investors and company vendors seek clarity on the direction of equities markets, interest rates and the US economy.

The forecast from financial services player Deloitte follows a bumper 2007 for Western Australia, in which the number of WA-based IPOs jumped from 96 to 123, while the state produced nine of the 10 best performing IPOs on the market during the year.

Nationally, the number of IPOs increased by 41 per cent in 2007 to 260, from 184 in 2006.

Deloitte corporate finance partner Steve Woosnam said turmoil in credit markets had created volatility in equity markets, making 2007 a year of lower price gains for IPOs.

"The high level of uncertainty in the market means vendors of many companies will take a wait-and-see approach over the next few weeks," Mr Woosnam said.

The firm found 52 per cent of all IPOs in the past year were trading at or above their issue price at December 31, compared to 77 per cent in 2006, and 63 per cent in 2005.

Victoria overtook WA to become the second largest state by value, with the value of funds raised in WA falling from $1.9 billion to $1.4 billion in the absence of significant individual floats.

The largest WA-based float in the past year was NRW Holdings ($303 million), compared to Emeco ($942 million) in the previous year, while the top performing IPO for 2007 was Wolf Minerals, which posted a 975 per cent gain at years end on its 20 cent issue price.