Companies delay IPOs, cancel raisings amid market chaos

Companies which had planned their float for the start of this year are being deterred by the performance of newly listed businesses. The Goldman Sachs Liquid IPO Index is down nearly 60 per cent from its highs reached last year when record sharemarkets fueled a burst of new offerings.

Fast forward to today, and the vast majority of companies that listed in 2021 are underwater, with the small-cap Russell 2000 Index in a bear market and the ASX Small Ordinaries Index in correction territory.

The local market’s biggest float of 2021, GQG Partners, is sitting 36 per cent below its offer price, while Judo Bank is down 12.3 per cent and APM Human Services International has shed 21 per cent from their listing prices respectively.

“This is certainly one of the most aggressive sell-offs in IPOs I’ve witnessed over the last 20 years,” Mr Mitchell said.

Bargain hunting

Hedge funds have taken advantage of the trend by shorting newly listed companies, while Mr Mitchell said Ophir was reviewing a number of opportunities in the space given valuations were starting to look attractive, and most companies were tracking at, or above, their prospectus earnings guidance .

A similar theme has been playing out in relation to equity capital markets transactions, with businesses around the globe pulling $ US3.4 billion in deals in January and a further $ US3.3 billion in February.

Those figures are up considerably from the $ US649 million withdrawn in January and $ US490 million in February last year.

The number of companies withdrawing deals has accelerated due to the war between Russia and Ukraine, headlined by the postponement of SBI Sumishin Net Bank’s $ US1.2 billion float in Japan.

Market nerves have spilled over to the local stock market, forcing a number of Australian-listed companies to cancel their raising plans.

Nickel Mines announced last week that it had withdrawn its $ US13 million share purchase plan (SPP) due to “market volatility” and the retraction in the company’s share price caused by a short squeeze which rocketed nickel prices briefly above $ US100,000 a tonne .

And on Monday, IGO revealed that it will push back the timetable for its acquisition of Western Areas in response to the “recent significant nickel price volatility” which it attributed to the Russian invasion of Ukraine.

“[The war] has reportedly created the need for a large industry participant to manage a nickel short position on the LME, ”the company said.

Earlier this month, Telix Pharmaceuticals scrapped its SPP after considering market conditions, while small-cap Medibio canceled an underwriting agreement related to a $ 5.7 million capital raising “in light of the escalation of hostilities between Russia and Ukraine”.

Leave a Comment