From Little Things Big Things IPO: Insights From FY24 and FY25

Summary

There was a 20% reduction in the number of IPOs on the Australian Securities Exchange (ASX) between FY24 and FY25. While FY24 saw 33 IPOs, FY25 saw 27. However, despite the reduction in the number of IPOs, there was an increase of almost 200% in aggregate capital raised between financial years. This indicates a trend towards quality over quantity, as we are seeing fewer but larger IPOs.

Looking at FY26, economic conditions are improving with inflation and interest rates trending towards target ranges. In addition, ASIC is trialling a streamlined process for companies to raise money and list in Australia. Taken together, the time is ripe to be getting ready for an IPO.

Continue reading for our team’s analysis.

Economic background

It is helpful to first briefly outline the changing economic backdrops of FY24 and FY25 which may have influenced the increase in aggregate capital raised.

FY24

The Reserve Bank of Australia (RBA) increased the cash rate from 4.10% to 4.35% in November 2023 and maintained this rate throughout FY24. This was accompanied by inflation pressures, including the Consumer Price Index (CPI) remaining above the RBA’s target range of 2-3%, being 6% in July 2023 with easing to 3.6% in June 2024. Higher interest rates and cost-of-living pressures also drove consumer spending and corporate investment down, leading to a shift towards essential spending and more selective business investment.

FY25

The RBA maintained the cash rate at 4.35% throughout FY25 until February 2025, at which time it was reduced back to 4.10%. FY25 also saw a reduction in CPI from 3.8% in July 2024 to within the target range at 2.1% in July 2025. With relief from high interest rates and easing cost-of-living pressures, there should in theory have been an associated injection of consumer spending and business investment. However, FY25 also brought with it economic uncertainty globally from which Australia was not immune. Although this uncertainty may have sent shockwaves through M&A activity, the 200% increase in aggregate capital raised is supportive of an implication of increased investor appetite for IPOs on the ASX.

Market snapshot

Having now outlined the economic background, let’s now do a deeper dive into the IPO data for each financial year.

FY24

Considering FY24 by GICS Industry Group, the lion’s share of IPOs was in Materials, accounting for 57% of total IPOs. This was followed by the Health Care Equipment & Services and Capital Goods industry groups, with each respectively accounting for 12% and 9% of total IPOs.

The top three IPOs by capital raised were respectively in the Capital Goods, Consumer Services and Materials industry groups. Particularly, the IPOs were Redox Ltd with a raise of $402 million, Guzman Y Gomez Ltd with a raise of $335 million, and Metals Acquisition Ltd (now MAC Copper Limited) with a raise of $325 million (upsized from $300 million). These three offerings accounted for more than 56% of the aggregate capital raised for IPOs on the ASX for FY24.

The lowest IPOs by capital raised were primarily in the Materials industry group, typically raising up to $5 million.

FY25

Turning to FY25, the majority of IPOs were again in the Materials industry group, accounting for 42% of total IPOs. Listed Investment Trusts and Listed Investment Companies (current uncategorised but traditionally part of the Financial Services GICS Industry Group), accounted for 23% of total IPOs. After these entities, it was entities from the Transportation and Pharmaceuticals, Biotechnology & Life Sciences industry groups, with each accounting for 7% of total IPOs.

The top three IPOs by capital raised were respectively in the Equity Real Estate Investment Trusts (REITs), Transportation, and Materials industry groups. Particularly, the IPOs were Digico Infrastructure REIT with a raise of $1.995 billion, Virgin Australia Holdings Ltd with a raise of $685 million, and Greatland Resources Ltd with a raise of $490 million. Much like in FY24, these listings accounted for more than 56% of the aggregate capital raised for IPOs for the financial year. However, it is acknowledged that this figure is skewed by the significant raise by Digico Infrastructure REIT.

As in FY24, the lowest IPOs by capital raised in FY25 were primarily in the Materials industry group, with each IPO typically raising up to $10 million.

Analysis

Two trends emerge from the above data. Firstly, the Materials industry group dominated the total number of IPOs on the ASX in FY24 and FY25. Although strength in numbers did not necessarily translate to strength in capital raised, in both financial years Materials secured third place for capital raised by dollar amount and was healthily represented across the board. The second trend is the continued resilience of the listed investment vehicles industry, with listed investment companies and listed investment trusts making up 28% of aggregate capital raised for IPOs in FY25.

Perhaps most interestingly, there is an inverse relationship between the reduction in the number of IPOs between FY24 and FY25 and the amount of capital being raised. While the aggregate capital raised for IPOs on the ASX in FY24 was approximately $1.88 billion, the aggregate capital raised for IPOs in FY25 was approximately $5.63 billion. This accounts for an increase of almost 200% in aggregate capital raised for IPOs on the ASX. Given the skew in FY25 caused by Digico, there is cause to doubt the statistical value of this figure. However, even without Digico, the aggregate capital raised for FY25 is $3.63 billion, being an increase of 93% from FY24.

Forward outlook: FY26 and beyond

Looking into FY26, the RBA has continued to lower the cash rate target, being 3.60% at the time of writing. This represents the lowest target since April 2023 when it was also 3.60%. CPI also currently sits on the low end of the RBA’s target range, now at 2.1%. However, this stands in contrast to April 2023 when CPI was at 7%. Taken together, the market is currently operating in economic conditions where the cash rate target is relatively low and CPI is within target range.

These numbers inspire speculation about whether we will see continuing growth in aggregate capital raised irrespective of the number of IPOs, leading to larger amounts raised as companies seek more capital on listing. This would be supported by the recently announced streamlined fast-track to the ASX, which will hopefully contribute to a blossoming of IPOs alongside a corresponding bloom in aggregate capital raised.

Contact us

Our expert team at Bird & Bird in Sydney has a proven track record with extensive experience across diverse sectors and transaction sizes. With significant experience preparing companies for an IPO and advising ASX-listed companies, our team is ready to assist with any questions relating to equity capital markets and IPOs.

For queries, please contact:

• Chris Clarke, Partner
• Aaron Chan, Special Counsel
• Benjamin McDermott, Associate