IP-Oh indeed: clean debuts, firm books and a market with a pulse

Following last year’s IPO drought, the ASX is finally pouring something stronger than soda water. Not champagne, mind you, but if you’ve been watching the order book chatter, you’ll have noticed the market is starting to remember how to take a risk without immediately breaking out in hives.

Let’s be honest about the hole we climbed out of. Calendar 2024 scraped along at about two-decade lows, with 29 IPOs tallying roughly $4.1 billion. That’s not some quirk of the index – it’s just an old-fashioned buyer’s strike where sponsors, brokers and punters all looked at each other and decided they’d rather sit in term deposits or exchange-traded funds than punt individual bits of the market.

Anyone who managed to do a raise had to price it to perfection and use a Steve Irwin-styled promoter, who filled his own pockets with ongoing corporate, management and big cap raising fees - as well as options and pretty much whatever else could be shaken out of the pockets of those listed companies unfortunate enough to raise last year.

Fast forward, and April 2025 still looked anaemic with new listings only adding about $225 million in quoted market cap. And that didn’t look too bad compared to May, which was stone cold dead at $0 with no trains leaving the IPO station. June showed up with a surprising amount of muscle, and July, while still not in bonanza territory, kept the blood moving.

It wasn’t just that deals came off; it was the way they came off with tighter books, less flabby “friends and family” allocations and less stag. Think pesky profit-takers just a minute after the raise has been done.

But a word of caution on the ASX’s favourite counting stat, because otherwise June looks like a fairy tale. When the ASX quotes “market capitalisation of new listings”, that’s the value at admission, not the cash raised. So, one or two sizeable admissions can blow out the monthly number, even if the deal count stays modest.

With that in mind, June posted about $7.36 billion of collective new-listings market cap and a further $3.38 billion in capital raises from already-listed names. July followed with about $1.67 billion in new-listings market cap and $2.36 billion in capital raised, and August, while smaller on the new-listing front at about $219 million, still clocked about $3.344 billion in capital raises.

The scoreboard tells you what the vibe feels like: new capital swung solidly positive in June, with new capital outstripping the value of market exits by about $10.8 billion. It also stayed positive in July by another $6.6 billion, before turning slightly negative in August, but that was largely due to some chunky de-listings, which didn’t kill momentum outright.

Dollar Bill suggests the best proof that confidence is edging back is always on day one. Virgin Australia finally re-hit the boards on June 24 at $2.90 a share after raising $685 million. It opened at about $3.14 and closed day one near $3.23 - a tidy double-digit pop for a long-telegraphed relist. The allocation mix skewed to institutions, which is what you want when you’re re-establishing a register that can hold stock through a cycle.

A couple of weeks later, GemLife, priced at $4.16 per stapled security to raise $750 million, closed its first day about 4 per cent up. It was the largest domestic IPO of the year. Not fireworks mind you, but not a faceplant either. It looked like properly priced paper that traded as if it belonged.

If floats were the headline, follow-ons were the body text. The early cycle choreography is textbook: placements, rights issues and SPPs do the heavy lifting while the IPO window tests its hinges.

Through July–August you could point to oversubscribed raises across the small-cap patch with pretty much every raise oversubscribed. As a few examples, Locksley Resources put its hand up for about $3 million but ended up taking more than $5 million, with applications topping $11 million. Astute Metals dragged in about $5.5 million, including some significant scale-backs. Marquee Resources easily met its target and then some, dragging in roughly $2.5 million. Then there was a standout retail datapoint with Australian Strategic Materials pulling in around $12 million via an SPP, which had set out to raise just $3 million. The company also banked a further $13 million via a cap raise – also oversubscribed – just for good measure.

These numbers are not living in isolation. As Dollar Bill recently pointed out, small caps on the ASX outperformed every other sector over the past 12 months by more than 8 per cent – the first sector outperformance in nearly five years. I said it a year ago and I’ll say it again - small caps are back baby!

Supporting this, the latest ASX advisor survey, which collects the opinions of more than 100 industry professionals, has more than 50 per cent backing small caps over everything else. Importantly, price-to-earnings ratios of small caps remain significantly beneath their larger counterparts – some of which are trading at crazy multiples.

That mix tells you that while risk appetite may not yet be sprinting for small caps, value suggests it is seeping back with evidence in support.

Market tone also matters. August’s cash market ran on-market average daily value in the $7.1–7.2 billion post code, and the S&P/ASX 200 VIX hung around the low-teens. 

For those of you who don’t live and breathe markets like Dollar Bill, let me explain. Talk about the “cash market” and the ASX refers to the average dollar value of shares traded per day on the ASX’s order book, or total turnover divided by the number of trading days. And the VIX, commonly referred to as the “volatility indicator”, is something Dollar Bill watches religiously on the telly at the club through his cognac glass because of its unerring accuracy to predict turning points. A relatively low VIX, as we have now, suggests it’s steady as she goes, while the average daily values traded in August were up 20 per cent on the average for the previous months and about 25 per cent on this time last year.

The past few months, kicking off in June, have clearly put a little froth back into the taps, with July keeping the glasses topped up nicely. August reminded us that the keg still has a slow leak - but it’s definitely not empty.

The global backdrop isn’t hurting either. EY tallied 539 IPOs in the first half of 2025 globally, which raised a lazy US$61 billion. This was up on the prior year, with a record cross-border mix and about 62 per cent of US listings coming from foreign issuers. That’s the sort of wind you want at your back if you’re an Australian sponsor arguing for global money to follow you home.

As EY’s global leader on IPOs George Chan put it: “The realignment of the IPO market across regions and sectors reflects a deeper shift in global capital flows and investor sentiment.”

Closer to home, the pipeline page that looked like a ghost town six months ago is finally getting a few lights on. The ASX’s “upcoming floats and listings” now show a live queue into late September and October. In fact, there’s about a dozen queued up now when there was literally three on the page only a few months back. The current names include DPM Metals, Golden Dragon, Golden Globe, Green & Gold Mining and PC Gold – a veritable sea of gold.

There’s also Temas Resources, Revolution Private Credit Income Trust, Ryman Healthcare and a handful of others lining up with indicative tickets in the single-digit millions to a few hundred million.

Of course, none of it is guaranteed. The ASX reminds you that only formal applications make the list, typically four to six weeks out and dates/amounts are subject to change. But the point is simple: there’s inventory again. Sponsors have stopped asking whether the window exists and have started asking whether their story belongs in it.

Now, Dollar Bill isn’t suggesting we’re back in 2021-land – at least not yet - but the old left leg is starting to twitch a little.

And if 2024 taught humility, 2025 is teaching muscle memory. The ASX has rediscovered the quiet arts of setting a range, running a book and, most importantly, closing one. Virgin and GemLife weren’t miracles - they were signals that investors will fund a credible equity story at a fair price.

There’s also a subtle but important shift in who’s doing the buying. The institutional tilt on larger raises has helped registers look sturdier and, as a result, the first day’s post listing looks less like a street fight. Retail is peeking back in where the story makes sense, SPPs that meet or beat targets and early closes that don’t feel like stunts, which is the right order of operations.

And the months ahead? Dollar Bill suggests watching the order books and the early day volumes for new listings. If allocations continue to tighten and stag profit-takers don’t tear it up by lunchtime, the window for small caps and new listings is more than just ajar. As the legendary former Australian rugby union coach Dave Brockhoff once said, when the opportunity presents, it’s the time for crowbars through the Opera House windows – get in, loot the joint and get out.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au