IPO Watch: Here’s how 83 ASX floats have performed over the past year

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Investors are showing strong belief in the small cap sector with the majority of IPOs in the first half of the year hitting 100 per cent of their fund raising targets.

While the number of ASX initial public offerings in the first half was down to 39 from 57 last year, there was still plenty of activity in the small caps space with 31 new companies coming onto the bourse between January and July, reports business advisory HLB Mann Judd.

Of those floats, the majority were able to easily raise 100 per cent of their cash targets, the firm says.

Businesses looking to raise between $24 million and $50 million struggled slightly more than other raise targets, but only slightly – with companies hitting their IPO targets 93 per cent of the time.

It remains a challenge for everyday investors to invest in IPOs, however, as we report elsewhere today.

>> Scroll down for a table showing how 83 ASX floats have performed in the past year

Here are three reasons for the current strength of small cap floats:

Miners continue to drive listings 

The materials sector accounted for 16 of the 39 new entrants to the ASX so far this year.

Fourteen of these companies were small caps, which raised a total of $92 million to list on the ASX. However, thats’ half the number of small cap miners that listed in the same period last year, then raising $300 million.

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Smaller software companies find the ASX

Six software and services companies hit the boards in the first six months of the year, having raised $113 million. Every tech play was able to hit its fund raising targets, HLB Mann Judd reported.

Small caps hit their targets more frequently across all sectors 

Overall a total of 39 companies raised $2.5 billion in the first half. On average, the local market raised 88 per cent of the funds they sought from investors, while small cap companies raised 98 per cent of their required capital, on average.

“This indicates strong support by investors for small cap companies, and we have seen a considerable number of small cap entrants to the market in 2018,” HLB Mann Judd partner Marcus Ohm said.

IPO raise doesn’t guarantee performance

However, hitting your IPO cash target doesn’t guarantee share price gains after the bell rings.

Some, like waste water treatment business Calix (ASX:CXL), have seen immediate share price gains. The business raised $8 million issuing shares at 53c each and while it’s only been on the boards three days, the share price is sitting up more than 50 per cent at 83c.

Meanwhile, drone parachute maker Parazero (ASX:PZO) is down 12.5 per cent on its offer price of 20c, sitting at 17.5c on Tuesday.

On the whole, companies that listed last year were more likely to be down 12 months later than ahead. As the following table shows, of the 83 companies that listed last year, 37 came out ahead.

For those that have flown, though, the gains have been significant: top performer and business software play Cape Range (ASX:CAG) is up 475 per cent on its IPO, sitting at $1.10 this week.

Cape Range’s shares have soared this month — though it’s told the ASX it doesn’t know why.

Here’s a table showing how 83 ASX floats have performed in the past year:

Scroll or swipe to reveal full table. Click on headings to sort

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