Australian IPOs outperform broader market

Tim Eisenhauer is the managing director of OnMarket BookBuilds. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind.

The Australian initial public offerings (IPOs) market is delivering a robust performance, with returns from companies listing on the Australian Securities Exchange (ASX) striking 1.3 per cent over the first quarter.

While at first appearances that doesn't seem to be a staggering number, it nevertheless represents a significant 6.7 per cent outperformance of the S&P/ASX 200, according to a new barometer, the OnMarket First Quarter IPO Report.

The OnMarket First Quarter IPO Report reveals that the average return of the 13 companies which listed on the ASX in the first quarter of 2016 was 1.3 per cent, easily outperforming the S&P/ASX 200, which fell 5.4 per cent, by 6.7 per cent over the same period.

Large-cap shares, as measured by the S&P/ASX 50, fell 5.1 per cent, disappointing many Australian retail investors, who are overloaded with bank and mining stocks, as well as cash investments.

The strong returns revealed by the OnMarket First Quarter IPO Report follow on from an impressive IPO performance in 2015. The average return of the 93 companies that listed on the ASX in 2015 was 23 per cent, according to analysis of Dealogic data by OnMarket.

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Compare that with the S&P/ASX 200, which lost 3.0 per cent in the same period, and IPOs clearly outperformed the overall market last year, and a similar trend may be displayed in 2016.

The table below reveals that companies listing on the ASX in the first quarter represented a broad range of sectors, including finance and technology, with miners notably absent from the list. So as commodity prices have fallen, so too have resource listings--no surprises there.

But even more importantly, the table reveals a very healthy result--most companies were up by the end of the first quarter.

Successful floats have included biotech company Recce (RCE), which has posted impressive gains since listing on the ASX in January. While the company posted an impressive 50 per cent first-day game, it had maintained a healthy return of 30 per cent by the end of the first quarter.

Oneview Healthcare (ONE), the first Irish company to list on the ASX after raising $62.4 million to fund the technology firm's expansion, has also held its gains. It posted a 21 per cent return over the first quarter, building on its first day gain of 3 per cent.

First quarter ASX IPOs

(click table to enlarge)

Source: OnMarket BookBuilds and Dealogic