The sluggish Initial Public Offering (IPO) markets are in need of a boost from major listings, according to consultancy group Ernst & Young (E&Y). The firm suggests that the introduction of big names at reasonable valuations could help normalize the market. This comes as the U.S. IPO activity has remained slow-paced this year compared to previous bull markets.
E&Y also noted that market conditions may soon become more favorable for IPOs as inflation peaks and interest rate hikes begin to ease. The firm pointed out that market sentiment is on the rise, evidenced by the rebound in growth stocks and ‘s 35% climb year-to-date.
One of the potential big names is social media platform Reddit, which was valued at $10 billion in 2021 when it raised $700 million but has seen its valuation cut to $5.5 billion by Fidelity Investments in May this year. Despite filing for IPO paperwork with the Securities and Exchange Commission (SEC) in December 2021, Reddit has held off on listing.
In Australia, two potential billion-dollar listings could give a much-needed boost to the Australian Securities Exchange (ASX), which is facing its worst year on record for IPOs. Virgin Australia, with a market cap of around $1 billion, is set to return to the bourse sometime in November. Meanwhile, steel business Molycop, owned by U.S. private company American Industrial Partners (AIP), is also eyeing valuations north of $1 billion and aims to list before the end of the year.
The only IPO on the ASX over the past week was Great Divide Mining (ASX:GDM), a Queensland explorer focusing on gold and critical metals assets. The company listed at 20c and is currently working on its maiden JORC 2012 compliant mineral resource estimate at Yellow (OTC:) Jack, which it expects to complete within the coming weeks.
The best-performing IPO stock in 2023 so far is Australian Critical Minerals (ASX:ACM), which announced earlier this week that its maiden exploration program at the Cooletha lithium project in the Pilbara had been successfully completed.
Upcoming ASX IPO listings include Novo Resources (ASX:NVO), Freightways Group (ASX:FRW), Pioneer Lithium (ASX:PLN), and Far Northern Resources (ASX:FNR).
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