2023 IPOs by the numbers

A continuation of 2022 and global trends for IPOs

Consistent with trends in global capital markets and continuing on from similar trends in 2022, the Australian IPO market was muted in 2023. The number of IPOs was down for a second year in a row, representing the lowest number of total IPOs in a calendar year since we started collecting IPO data in 2016.

The continuation of this trend demonstrates the headwinds issuers have faced in raising capital since early 2022 with another year of high inflation and rapid increases in interest rates across the globe contributing to uncertainty in global and Australian capital markets.

Issuers with a market capitalisation of less than $100 million most frequently escrowed 20-40% of their ordinary securities, while issuers with market capitalisations of $100 million or more tended to adopt higher ranges of escrow, from 40-80%. Redox, the largest listing of the year, had approximately 70% of its ordinary securities in escrow. Escrow was typically released in two or three tranches. See below in relation to escrow periods and release.

The release of Redox’s shares occurred in two tranches – one after 12 months (which represented ~34% of total shares on issue), and another after 24 months (which represented ~36% of shares on issue). 

The second largest IPO – Brazilian Rare Earths – released the bulk of its escrowed securities in one large tranche, amounting to ~63% of shares on issue, at 24 months. The Nido Education IPO similarly released 52% of the total shares on issue in one tranche at 24 months. However, this was not necessarily the case across the board for listings exceeding the $100 million category. VHM Limited, the third largest IPO, released a 12% tranche after 6 months, an 18% tranche after 12 months, and a 24% tranche after 24 months. 

A handful of other IPOs with a market capitalisation of $100 million or more also spread out the release of restricted securities, with one releasing the majority of shares at 3 to 6 months (Acusensus Limited), and another doing so at 24 months (Curvebeam AI Limited). The escrow periods all expired due to timing milestones being met, and there were no examples of early release for performance related reasons in this category (noting there was an early release trigger for at least one issuer in the small-cap category). 

Recognising that small-caps comprised the majority of listings for the year and tend to have a lower amount of escrow, around half of all floated entities had less than 40% of their total outstanding securities restricted upon listing. 

Approximately 65% of the total number of IPOs for the year were subject to mandatory escrow, with another 23% being subject to a mix of mandatory and voluntary. The ASX only imposes mandatory escrows in certain circumstances and usually when the relevant company does not have the requisite track record of profitability or revenue acceptable to ASX. This implies that for a large number of IPOs this year, companies were unable to demonstrate the requisite level of profitability or revenue to satisfy ASX that mandatory escrow did not need to apply. This is likely due to the volume of new early stage companies listing (such as in the mining exploration, life sciences or tech sectors), making it more difficult to satisfy ASX that mandatory escrow should not apply.

Underwriting – a further push for certainty

As a further push for certainty in the face of IPO headwinds, the percentage of underwritten IPOs increased dramatically in 2023 as compared to 2022, increasing from 7% to 25% of all IPOs, being even more notable for those with market capitalisations over $100 million, increasing from 50% to 75%. As with 2022 and 2021, the majority of the IPOs which were underwritten in 2023 had market capitalisations exceeding the $100 million mark and continued to be reflective of the desire of issuers for greater certainty for valuable listings. 

Sector spotlights

Materials and energy resources listings comprised the majority of IPOs in 2023 (~75%), consistent with the larger portion of mid and small market capitalisation IPOs and at similar levels to those recorded in 2022. The nature of these listings have yet again reflected ongoing strength of the ASX in attracting materials and energy resources sector companies to its boards.

Listings relating to health care, biomedical technology and pharmaceuticals comprised the next most represented sector (~15%), perhaps reflective of the strong growth in that sector. These included medical imaging platform company Curvebeam AI, blood test developer Cleo Diagnostics Limited, NDIS provider Freedom Care Group Holdings Limited, health diagnostic data company Enlitic Inc and consumer pharmaceutical company LTR Pharma Limited.

Other non-materials and energy resources IPOs rounding out the balance for the year included Acusensus, a developer of artificial intelligence-enabled road safety solutions and Nido Education, the national owner and operator of early childhood education centres.

IPOs by sector 2023

Geographic spread

2023 was dominated by Australian-incorporated issuers, with 94% coming from the domestic market. Only Canada and the United States of America represented foreign jurisdictions.

Jurisdiction of issuer incorporation 2023