There are just a dozen or so floats scheduled for early 2024, as 2023’s lean patch of Initial Public Offerings (IPOs) is expected to extend into the new year.
As usual, those companies scheduled to list are made up predominantly of mining and resources companies.
Those looking to make their debut include Ashby Mining Ltd, Far Northern Resources Ltd, Kali Metals Ltd and Western Australia Energy Resources Ltd.
The Warren Mundine-backed Fuse Metals Ltd is another hopeful. The company’s flagship Mt Sydney Project is in the prolific Paterson Province of Western Australia and its tenure represents a significant landholding of 1,119 square kilometres, with 484 square kilometres as a granted exploration licence and a further 635 square kilometres under application.
Fuse managing director Todd Axford sat down with Proactive recently to talk through the IPO, the company’s assets and its point of difference.
Proactive will also be sitting down with Infini Resources Ltd CEO Charles Armstrong to discuss its potential January IPO. Infini is looking to raise around $5.5 million. The company has targeted lithium and uranium and has acquired or is in the process of acquiring eight exploration projects - three in Australia and five in Canada.
The big IPO of the year could be Virgin Australia (ASX:VAH) after Chemist Warehouse backdoor listed into Sigma Pharma Ltd.
Macquarie-backed data centre operator AirTrunk, Mexican food chain Guzman Y Gomez, mining services company Molycop and logistics group Mondiale VGL are also ones to watch.
Uncertainty affecting investment
Citi Investment Banking managing director Jack Groom, in a discussion with The Australian, highlighted the prevailing uncertainty affecting the minds of asset buyers and sellers, impacting the IPO market. Despite the availability of investment capital, there has been a lack of compelling opportunities to attract institutional investors.
“There’s lots of money around. All of the fund managers and the super funds continue to receive cash that they need to invest. So, it’s not an ability to invest. It’s more, frankly, on the supply side, in my view,” Groom said.
He pointed out that in the current climate, equity investors favour familiar, trackable businesses, making IPOs, which introduce new and less-known businesses to the market, less appealing.
According to Groom, the recent performance of IPOs has fostered additional caution. Equity investors like businesses that they know and that they can track for a long period of time, particularly in this environment.
“An IPO is a new business coming to market that they don’t know particularly well. “There is an element of conservatism or cautiousness that they would put on that business. And look, the track record of the last cycle of IPOs hasn’t been great. And that adds another layer of cautiousness on top.
“So I think the issue has not been the want of fund managers to invest in an IPO. It’s getting an asset that sort of fits the bill, with respect to asset quality, size and appropriate price expectations to meet the market. They just haven’t been there.”
Groom believes the IPO market is theoretically open but investors are waiting for the right IPO that will energise fund managers and create a positive experience for all stakeholders. He observed that many businesses are opting for trade sales or mergers, which are more straightforward transactions than IPOs, thereby limiting the availability of new listings.