Will Medibank Private Ltd be the best of 2014’s IPOs?

Medibank Private Ltd (ASX:MPL) and Healthscope Ltd (ASX:HSO) have enjoyed strong debuts, but many others have failed to live up the hype.

By the end of December, roughly 75 companies will have listed their shares on the Australian share market in 2014. This highlighs the confidence in equities markets and the extent to which corporations have tried to take advantage. According to Smart Company, more than $19 billion will have been raised.

Of course, there have been plenty of floats which have taken the market by storm. While nothing will come close to eclipsing the interest Medibank Private Ltd (ASX: MPL) received (earning the Federal Government around $5.7 billion), Healthscope Ltd (ASX: HSO), Bellamy’s Australia Ltd (ASX: BAL) and the more recently listed Godfreys Group Ltd (ASX: GFY) have also performed strongly.

But then there have also been a number of duds, which could contribute to less IPO activity over the coming 12 months. Recently, we saw aged-care operator Estia Health Ltd (ASX: EHE) list at $5.75 per share, which has since dropped more than 20% to trade at $4.56. We’ve also seen Surfstitch Group Ltd (ASX: SRF), Latam Autos Ltd (ASX: LAA) and Ohh!Media Ltd (ASX: OML) suffer weak debuts this week.

Should this trend continue, IPOs in this market could certainly lose their appeal – particularly with investors becoming concerned about the plummeting commodity prices and how they will affect our economy.

Rather than jumping on freshly listed companies, it is often a good idea to wait a while before making a purchase. Besides, there are plenty of great companies already trading on the ASX which can often possess far greater growth prospects than those just listing.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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