There’s no sugar coating the IPO marketing in 2023: it’s been an absolutely brutal period of trading on the ASX.
As of May, globally there were only 310 IPOs during Q2 2023, a decline of three per cent year-over-year.
The statistics are even more bleak in Australia.
The market announcement by the ASX for June 2023, released last week, reported an 80 per cent drop in total capital raised in comparison to 12 months earlier. That’s a massive hit to companies whose growth strategy relies on the public markets to accelerate their own expansion.
The questions burning everyone’s proverbial lips are simple: will it turn and when? What are the key metrics holding the flow of capital and how long until they are overcome?
Spoke Managing Director Luke Derbyshire was recently in Melbourne for a series of meetings with clients and contacts across capital markets. Although no immediate or perfect solution was revealed, collectively the market is of the belief the worst has passed.
“The IPO market in 2023 has been particularly bearish,” said Luke.
“Investors have become more discerning and cautious, seeking quality and value in their investment choices, whereas companies looking to go public face the challenge of differentiating themselves in a crowded marketplace.
“They must demonstrate a clear value proposition, a strong track record of performance, and a compelling growth story to capture investors’ attention.
“Additionally, market volatility and uncertainties surrounding regulatory changes can further complicate the IPO process.
Kevin Imber, Managing Partner of Collier Creative, has spent more than 20 years working with companies to help them through the IPO process.
“The IPO landscape in 2023 has posed unique challenges from a marketing perspective,” said Kevin.
“With an increasing number of companies vying for investors’ attention, it is essential to craft a compelling narrative that resonates with stakeholders.
“Building a strong brand presence and effectively communicating a company’s vision, differentiation, and potential are critical.
“Leveraging digital platforms and utilising innovative marketing strategies can also help companies stand out in a competitive market.
“It is vital to engage early with creative professionals who can develop a comprehensive marketing plan that effectively showcases the company’s strengths and attracts the interest of potential investors.”
Manager of Corporate Finance at Melbourne based Cumulus Wealth, James Gibney has participated in several of the few IPO’s that have successfully rung the bell on the ASX in 2023.
“The current IPO market presents significant challenges for companies looking to join the ASX,” said James.
“Investors are scrutinising financial metrics and growth prospects more than ever before.”
“Companies need to demonstrate strong revenue growth, solid financial management and a clear path to profitability to gain investor confidence.”
“Of those IPO’s that we are seeing come to market there is a distinct uptick in the quality compared to 2022. Only very compelling opportunities are attracting funding at present. Aftermarket support for IPO’s has never been more important & quality news-flow post listing is a must to attract the attention of capital.”
Engaging with experienced corporate finance advisors is an important step in navigating these complexities and ensuring companies are well-prepared for the rigorous IPO journey.”
The immediate outlook for the IPO market remains choppy as the long awaited first signs of green shoots are still to emerge. The recent interest rate pause is potentially a step in the right direction, with all three experts hopeful that the worst has likely passed.
“Although official records are yet to confirm it, we’ve almost certainly experienced recession-like economic conditions in the first two quarters,” added Luke.
“We’ve always had strong belief the capital is there ready and waiting, the expectation now is that the macro conditions are consolidating which should create a more certain and positive pathway to join the ASX.”
LUKE DERBYSHIRE