The first half of the year was the quietest period for new ASX listings since before the global financial crisis but there are signs of improvement, a new report says.
A total of 14 offerings were floated in the first six months of the year, of which two were for companies with a market capitalisation above $100 million.
This compares to 59 new listings in the same period last year.
The initial public offerings raised $150m overall, an 81 per cent reduction from the $790m raised in 2022 and an even bigger drop from the $2.1 billion raised in the first half of 2021.
"It's been a really very challenging year, with a real drop-off in activity," said Marcus Ohm, a partner with HLB Mann Judd Perth and author of the accounting group's IPO Watch Australia Mid-Year Report.
"It's been a very difficult time with the capital markets, and generally we've seen a lot of our clients just struggling to raise money, almost regardless of the industry."
Pessimism about the state of the global economy and COVID-related supply chain disruptions have contributed to the dearth of listings, but the biggest factor has been rising interest rates, Mr Ohm told a media briefing on Thursday.
"It's just so inextricably linked to all the fundamentals that go on when it comes to investment," he said regarding interest rates.
Rising rates change the values of asset classes and contribute to uncertainty. For a larger company, preparing for a listing is expensive and there would be reputational damage if it fails to raise the desired sum.
The one exception to the lack of listings has been in the critical minerals space, Mr Ohm said.
A dozen of the new floats in the first half were junior explorers, mostly from Western Australia.
Four were seeking to develop lithium projects, three were interested in cobalt, nickel and graphite and others were focused on rare earth metals and hydrogen. Only two were exploring for the traditional mainstay of gold.
Mr Ohm said he was optimistic for the second half, noting signs of improvement.
Australia's largest chemical distributor Redox made its ASX debut in a July 3 float that raised $402m at an $1.34b valuation.
"Post-listings, I think that will really be a bit of a barometer for other listing coming to the market," Mr Ohm said.
Abacus Property Group is also raising $225m for its spin-off of Storage King into a $3b self-storage property trust to make its ASX debut in August.
Private equity giant Bain Capital is also expected to list Virgin Australia on the ASX at some point, which Mr Ohm expects might take place in the fourth quarter or perhaps 2024.
"It's a cyclical market, things can change really really quickly, and we are actually working on the quite a few IPOs behind the scenes, with probably eight or nine on the go," Mr Ohm said.
"There is stuff going on that gives us a bit more confidence about the second half of the year."
