Global share markets may have taken a beating in 2022 thus far, but that hasn’t stopped Aussie companies from raising gigantic amounts of capital.
There has been a bit of doom and gloom around as the ASX followed the pattern set by the US stock market, taking a dive in late January. But if fundraising is anything to go by. the future looks rosy.
Figures released by the ASX this week showed that listed companies raised $17.4 billion in capital in January — a phenomenal 1,526% improvement on January 2021, which saw just $1.1 billion raised.
Money, money, money
For the 2022 financial year to date, $107.7 billion in capital has been raised, more than double that at the same point last year ($53 billion).
The vast, vast majority of that capital has been raised via primary markets; shares are first issued on the primary market, before being traded via investors on secondary markets.
$15.9 billion was raised via primary markets in January, a truly mind-boggling 9,135% increase on the previous January.
The total cash market value for January was $181.2 billion, a 56% increase.
Booming IPO market
The huge increase in capital raises should come as no surprise, given a fertile market for initial public offerings.
As covered by Proactive, 2021 was a record-breaking year for IPOs, with global deal volumes jumping 64% and proceeds rising 67% year-on-year.
The final quarter was particularly fruitful, with IPO deal numbers the most active on record since 2007’s fourth quarter.
Multinational professional services network EY said that vaccine uptake and a rebounding economy had fuelled demand for IPOs in the last 12 months.
The sentiment is backed up by the ASX’s data, which shows a 5% increase in the number of listed entities at the end of January.
Some 2,311 companies now call the ASX home, and 165 companies have joined the list in FY22 (with 82 de-listing).
That’s also a large increase on FY21, which had seen 94 new listings at the same point in time, along with 83 departures.
However, EY Global IPO leader Paul Go said the momentum may not be sustained.
“In quarter four of 2021 the winds shifted with the surfacing of the COVID-19 Omicron variant, continuing geopolitical tensions, slowing IPO activity and increased market volatility,” he said.
“Whether or not IPO-bound companies press pause or forge ahead in 2022, they will need to satisfy investor demands for resilient growth strategies and well-articulated environmental, social and governance (ESG) plans.”
New additions
A handful of companies from across the spectrum made their ASX debut in January, including Africa-focused gold and uranium explorer Haranga Resources Ltd (ASX:HAR).
Haranga completed a successful $6.5 million IPO in November, providing a $12 million market capitalisation post listing.
Now, Haranga will take its cash injection to its African project portfolio, with a view to unlock gold and uranium prospects across Cote d’Ivoire, Burkina Faso and Senegal.
Australian-based miners Nico Resources Ltd (ASX:NC1) and Vertex Minerals Ltd (ASX:VTX) also joined the fold, raising $12 million and $5.5 million respectively.
Nico is out to develop a portfolio of mineral resource projects throughout WA and South Australia, mainly its cornerstone Central Musgrave Project, while Vertex will soon hold four gold projects within Australia, two of which already boast JORC-compliant mineral resources.
Archer Materials Ltd (ASX:AXE, OTC:ARRXF) has spun out its critical minerals business ChemX Materials Ltd, which raised $8 million in its IPO.
ChemX is focused on developing critical materials like high purity alumina (HPA), kaolin, halloysite and manganese for the new energy markets.
Careteq Ltd (ASX:CTQ) is a medtech developing cloud-based, software-as-a-service solutions and a range of sensors to help improve the lives of older Australians and those living with disabilities; it raised $6 million.
And pay-on-demand lender Beforepay Group Ltd (ASX:B4P) successfully raised $35 million to develop its platform allowing users to access a portion of their next pay packet ahead of time for a 5% fixed fee.
- Daniel Paproth