The outlook for initial public offerings (IPOs) remains strong this year, even though the proposed Telstra float is expected to steal the limelight.
Releasing a report yesterday on IPO activity, accounting firm HLB Mann Judd said more than 100 companies were expected to go public this year.
"We're anticipating thatit will still be a very strong year for IPOs," said HLB Mann Judd corporate finance partner Justin Audcent, whose firm helps to advise companies on listing on the Australian Stock Exchange (ASX).
But the prospect of easing commodity prices and a possible interest rate rise could result in slightly fewer floats than last year, he said.
The expected float this year of the federal Government's remaining stake in Telstra, Australia's biggest telco, may affect the timing of IPOs, Audcent said.
But enough capital existed to support other possible privatisations, such as the Snowy Mountains hydro-electric scheme and Medibank Private, the nation's largest health insurer.
"There's more than enough [capital] to soak up Telstra and these other large IPOs," Audcent said.
"It's more a case of ... it [T3] is really going to steal the limelight."
HLB Mann Judd studied about 134 of the companies which floated on the ASX last year.
It found that most of them were smaller companies with a value below A$100 million ($110 million).
They raised a total A$1.1 billion, helped by stable economic conditions, strong corporate profits and a booming resources sector.
The report found that materials and energy companies led the activity, accounting for 60 per cent of the 118 small cap IPOs, compared with 50 per cent in the previous year.
But the biotech sector was among the worst performers.
"While the public equity markets appear ready to back endless speculative activity in the resources sector, biotechnology has lost its shine," Audcent said.
The biotech sector delivered negative returns while materials companies posted an average gain of 51 per cent.
The report showed that smaller companies which undertook IPOs delivered more than double the gains of the benchmark S&P/ASX 200 index last year at 35.6 per cent.
