That’s the view from Perennial Private Investments, which has emerged as one of the biggest backers of pre-IPO and private growth businesses, and reckons it is meeting 20 or more non-listed companies seeking funds every week.“Previously, companies were forced to list early on the ASX and be a microcap, to sell to a strategic buyer, to go overseas to find money,” Perennial Private Investments boss Brendan Lyons, a former MD at Goldman Sachs, said on Thursday.
“Now they have an opportunity to stay private for longer, to get a lot bigger and make sure they’re a more meaningful business when they list.” He said delaying the IPO could end up to be a blessing, giving management more time to get ready for the listed market’s bright lights and ensure they’re big enough to attract institutional investor attention.“Just getting to an IPO is hard work, being a listed company is hard work, you have to be ready. If you have a stumble, the market will punish you... so it’s a positive that companies are taking more time to get ready.
It’s a good thing companies are willing to be patient; the IPO market is shut for listings of size, as it was for much of last year. Only $1.05 billion in IPO capital was raised in Australia last year, down from $12.85 billion in 2021. Lyons, who helps portfolio companies prepare for IPOs or takeovers after investing, reckons the floats market is “trying to build momentum” and could use a successful listing or two of size to re-enthuse investors.“The fact they have had another 12 months remaining private and growing can be a good thing. Some have had to extend funding, others were already profitable or breakeven, and are just waiting patiently.“Usually in the IPO cycle, the better ideas get up first.
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