The month that rained on ASX floats’ parade

Investor fatigue slugged the IPO market this year, with only one market debutant able to hold above its listing price.

It’s been a very soggy end to a remarkable year for ASX floats, with just one of the market debutants this month managing to hold above its listing price. And that is even after several downsized their offers and slashed offer prices ahead of the float.

For the year, more than $19 billion has been raised in the IPO market, around three times the amount raised in 2013. Of the 75 floats, around 50 have been in the small-cap space.

Fund managers say the recent failures are the result of investor fatigue, with too many new companies vying for institutions’ time to review their businesses, and poor timing as the collapse in oil prices triggered a fresh round of volatility in equity markets.

Here is a summary of the larger initial public offerings that have listed this month. Prices indicate first day’s performance.

  • Dec 17: Outdoor advertising company oOh! Media slipped after raising $169 million after cutting both the issue price and the offer size. It closed at $1.90 from an offer price of $1.93.
  • Dec 16: World’s largest online sports retailer Surfstitch, which sells 700 brands into 125 countries, raised $83m after trimming both the size and price from initial targets. It was previously majority owned by Billabong. It closed flat at $1.00 on its first day, and fell to $0.94 on day two.
  • Dec 15: Vocational education provider Australian Careers Network, which partners with TAFE colleges, nearly halved the size of its planned IPO, to just $54.4m from $100m. Despite that, the shares slumped to $1.38 from a $1.70 offer price.
  • Dec 10: Vacuum cleaner retailer Godfreys Group posted a solid debut in its $75m offering, the only one of any size this month to trade in the black. Founded during the Depression in 1931, the chain now has more than 200 stores in Australia and New Zealand. Its share price closed at $2.85 versus its $2.75 offer price.
  • Dec 9: Construction software company Aconex Ltd raised $140m after slashing the offer from a previous deal that had raised $230m at $2.20 a share. The firm was backed by private equity firm Francisco Partners, which sold out its 23.9 per cent stake in the float. Its share price closed at $1.80, down from its $1.90 offer price.
  • Dec 5: Aged care provider Estia Health, which runs 39 aged care facilities and is buying five more after the float, fared poorly. Backed by Quadrant Private Equity, it was the year’s fourth largest IPO and raised $725m, but the shares closed at $4.74, down 17.5 per cent from the offer price of $5.75.

In all, it has been a sour end to the year after the Medibank IPO, apparently ideally priced for both retail and institutions, stole the limelight in its November 25 debut.

As one fund manager who looks after about $2bn in funds under management put it: “There’s no real reason for us to invest or speculate in a float.”

“They don’t have a track record that you can pin down, when you’ve seen years of a track record and good value and growth for an existing company,” he said.

As this month has shown, investors can afford to be picky in the current market and bankers eyeing the next opportunity for IPOs after the February earnings season should proceed with caution.