Key Takeaways
- • Pacific Equity Partners (PEP) says wary public equity investors are demanding steep discounts that make ASX initial public offerings harder to execute, according to the Australian Financial Review.
- • Managing director Rohan Wolfers says the difficulty is most acute for companies too small to qualify for major sharemarket indices.
- • Limited sell-side research coverage and restricted index inclusion for small- and mid-cap companies are cited as obstacles to listings, which PEP says it would otherwise pursue more often.
Summary
Sydney-based private equity firm Pacific Equity Partners says that investor caution is constraining its ability to take more companies public on the Australian Securities Exchange, according to the Australian Financial Review. PEP managing director Rohan Wolfers says listed equity investors are demanding steep discounts on new issues, making ASX floats harder to price and execute.
Wolfers says the problem is particularly pronounced for smaller companies that fall outside the major sharemarket indices. Index inclusion can drive passive demand and liquidity, and its absence leaves smaller issuers more dependent on a narrower pool of active investors.
Wolfers also points to limited sell-side research coverage for small- and mid-cap companies as a factor weighing on listings. Thin analyst coverage reduces the visibility and marketing support available to issuers during an IPO, reinforcing investor reluctance to pay full value.
The comments suggest PEP would prefer to bring more portfolio companies to public markets than current conditions allow, leaving private equity sponsors to weigh listings against other exit routes such as trade sales and secondary buyouts. The article does not provide specific deal values, discount levels or pipeline figures.
Wolfers says the problem is particularly pronounced for smaller companies that fall outside the major sharemarket indices. Index inclusion can drive passive demand and liquidity, and its absence leaves smaller issuers more dependent on a narrower pool of active investors.
Wolfers also points to limited sell-side research coverage for small- and mid-cap companies as a factor weighing on listings. Thin analyst coverage reduces the visibility and marketing support available to issuers during an IPO, reinforcing investor reluctance to pay full value.
The comments suggest PEP would prefer to bring more portfolio companies to public markets than current conditions allow, leaving private equity sponsors to weigh listings against other exit routes such as trade sales and secondary buyouts. The article does not provide specific deal values, discount levels or pipeline figures.
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