New listing mania: Could 2022 be another record year for ASX IPOs?

Last year saw the highest number of new listings in a decade. But how is this year tracking?

An arrow going upwards with a road sign saying 'IPO ahead'.

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Key points

  • The IPO outlook for 2022 is optimistic
  • Last year saw the highest number of new floats on the market in the last decade
  • Majority of new ASX listings were in the materials sector

The 2022 year could be a positive one for initial public offerings (IPOs) and new listings on the ASX. This follows a record number of new entrants onto the ASX boards in 2021.

The 2022 IPO Watch Australia Report released by HLB Mann Judd Advisory and Accounting showed the largest number of new floats in a decade last year.

Let's take a look at what the report divulged.

Positive outlook for IPOs in 2022

New listings on the ASX in 2022 are on a positive trajectory, HLB Mann and Judd revealed. It is optimistic about the outlook for IPO activity in the early months of the year, especially in the materials sector.

The report stated:

There was a significant number of IPOs which came to market in the final quarter of 2021, and the pipeline continues to look strong for early 2022.

There were 27 companies which had applied for listing to the ASX at year end, a significant increase from the 14 that had applied at the same time last year.

These companies are hoping to raise $250.4 million in total, an increase from the $171.0 million sought the previous year.

Of these proposed listings, 17 were in the materials sector. And 76% of the materials listings involve gold projects, the report stated. Meanwhile, 3 are in the consumer services sector and five are in the technology sector.

The largest proposed listing is US Student Housing REIT, which is looking to raise $45 million, and the second biggest is Beforepay Group Ltd, which is seeking £35 million. Beforepay (ASX: B4P) listed on the ASX on 17 January.

US Student Housing is proposing to list on the ASX on 16 February with the ticker USQ.

What happened in 2021?

In 2021, there were 191 new listings on the ASX, raising $12.33 billion. This was more than double the funds raised in 2020.

This was a record for the decade and more than 2019 and 2020 combined. In 2020, the first year of the COVID-19 pandemic, just $4.98 billion was raised via IPOs.

The three biggest IPOs in 2021 accumulated $3.34 billion, which was 27% of the total funds for the year.

However, small caps made up the bulk of market entrants, at 76%, or 145. Materials companies made up 68% of all small-cap IPOs.

A total of 107 materials companies were listed, representing the majority — 56% — of all new ASX listings. However, this represented only 18% of total funds raised.

In total, 12 of the listings were foreign companies compared to 9 in 2020. Five were from the United States.

The new companies were also shown to receive strong support, with 87% of new floats achieving their subscription targets.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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