to a brighter IPO market, with the proviso that interest rates stabilise and volatility in financial markets recedes.Ironically, it was veteran Credit Suisse ECM banker Campbell Lobb, who developed one of the most reliable measures of the market readiness for IPO activity.
Warburton says the rescue of Silicon Valley Bank and the takeover of Credit Suisse by UBS caused a spike in the VIX to 26.5. However, on Wednesday, the VIX fell to 21.4 as the world’s five leading central banks provided liquidity to the global banking system. Another leading ECM banker at a rival firm says the most important criteria for a revival of the IPO market in Australia will be a stabilisation of the interest rate outlook and lower market volatility. He agrees that the VIX needs to be sustained below 20 for several months.He says there were only two IPOs worth more than $100 million last year, which means there has not been a decent-sized float for 18 months, which is a long time in the wilderness.
Super funds are natural buyers of IPOs because of the need to diversify their Australian sharemarket holdings. A recent study of the top 20 individual shareholdings of the largest 14 super funds by National Australia Bank found that these comprised 25 per cent of overall holdings of listed shares globally.
He says China’s reopening in January buoyed market sentiment and that led to the best January for trading on the ASX in more than 20 years.“We did a couple of deals in Asia in the first couple of weeks of January, and they traded well. The hedge funds were back in January after basically being asleep for the second half of last year.
Warburton says IPOs would normally be kicking off about now, but people aren’t quite ready to go. “But there’s a lot of activity now as plans are set in motion for companies to list in the second half.”Another banker said the Virgin IPO could easily be rolled over to later in the year if there remained volatility in financial markets and uncertainty about the Fed’s fight against inflation.