Mexican restaurant chain IPO may be turning point for Australia's market

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Mexican restaurant chain IPO may be turning point for Australia's market

SYDNEY - After two years in deep freeze, Australian investors will be looking for signs the initial public offerings market is thawing as fast-growing Mexican restaurant chain Guzman Y Gomez serves up the country's biggest IPO in 11 months.

Australian listings collapsed after a record 2021 as pandemic stimulus payments ended and the central bank raised interest rates to slow inflation. In 2024 so far, Australia has raised just A$98 million in IPOs, the second-lowest June half in more than a decade, according to LSEG data. A prospectus filed in May generated rolling headlines about GYG's target of opening at least 30 stores per year from 183 in Australia currently - a rate it has achieved just once, in 2023 - and about its omission of store lease liabilities and share-based payments from earnings projections.

"The restaurant space is highly competitive. Switching costs are nonexistent for patrons and barriers to entry are relatively low."

 

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