1 00:00:05,760 --> 00:00:08,130 Sean Aylmer: Welcome to the Fear and Greed business interview. I'm Sean 2 00:00:08,340 --> 00:00:11,340 Sean Aylmer: Aylmer. After a pretty lackluster year, the listing of Guzman 3 00:00:11,340 --> 00:00:13,920 Sean Aylmer: y Gomez on the ASX a few weeks back got 4 00:00:13,920 --> 00:00:17,399 Sean Aylmer: everyone excited about IPOs again. But we've had a lot 5 00:00:17,400 --> 00:00:19,980 Sean Aylmer: of companies leaving the boss and not that many taking 6 00:00:19,980 --> 00:00:22,680 Sean Aylmer: their place. So I wanted to take a closer look 7 00:00:22,710 --> 00:00:26,069 Sean Aylmer: at what's in the IPO pipeline, why there's been so few 8 00:00:26,070 --> 00:00:29,789 Sean Aylmer: listings, and what it'll take to attract more companies to 9 00:00:29,790 --> 00:00:33,928 Sean Aylmer: the ASX. Marcus Ohm is a partner at HLB Mann 10 00:00:33,929 --> 00:00:37,229 Sean Aylmer: Judd and the author of the IPO Watch Report. Marcus, 11 00:00:37,229 --> 00:00:38,280 Sean Aylmer: welcome to Fear and Greed. 12 00:00:39,090 --> 00:00:39,570 Marcus Ohm: Thank you, Sean. 13 00:00:40,200 --> 00:00:42,989 Sean Aylmer: So what's happening in the IPO market? Why is it 14 00:00:42,990 --> 00:00:43,979 Sean Aylmer: so quiet? 15 00:00:44,639 --> 00:00:48,720 Marcus Ohm: You're right, Sean. It's been a very challenging period for 16 00:00:48,780 --> 00:00:52,589 Marcus Ohm: IPOs. We've seen a few mixed signals. We've seen those 17 00:00:52,590 --> 00:00:55,620 Marcus Ohm: larger listings you referred to, so Guzman y Gomez listed 18 00:00:55,620 --> 00:01:00,300 Marcus Ohm: successfully raising $ 335 million, and we also saw Metals Acquisition 19 00:01:00,300 --> 00:01:03,120 Marcus Ohm: Limited listing earlier on in the year as well. But you 20 00:01:03,120 --> 00:01:06,389 Marcus Ohm: take those two listings out of it, they raised $ 660 21 00:01:06,389 --> 00:01:08,940 Marcus Ohm: million between them. But apart from that, it's been pretty 22 00:01:08,940 --> 00:01:12,300 Marcus Ohm: slim pickings. The usual contributions we've seen from the small 23 00:01:12,300 --> 00:01:15,330 Marcus Ohm: caps, particularly in the mining space, just hasn't eventuated. So 24 00:01:15,750 --> 00:01:18,300 Marcus Ohm: it's been a challenging situation and also if we look 25 00:01:18,300 --> 00:01:20,880 Marcus Ohm: at the pipeline going forward as well, that's pretty minimal 26 00:01:20,880 --> 00:01:23,939 Marcus Ohm: at the moment. So unfortunately it's been a tough six months for 27 00:01:23,940 --> 00:01:24,900 Marcus Ohm: the IPO market. 28 00:01:26,280 --> 00:01:28,319 Sean Aylmer: Why are we seeing so few listings? 29 00:01:28,770 --> 00:01:31,890 Marcus Ohm: I think if we strip it back to the fundamentals, 30 00:01:31,950 --> 00:01:34,470 Marcus Ohm: I think there is a lot of macroeconomic factors at 31 00:01:34,470 --> 00:01:37,350 Marcus Ohm: play at the moment. I think higher interest rates generally 32 00:01:37,350 --> 00:01:40,349 Marcus Ohm: aren't good for the equity markets. I did see a 33 00:01:40,349 --> 00:01:42,809 Marcus Ohm: little bit of a run with the (inaudible) backend 34 00:01:42,809 --> 00:01:46,020 Marcus Ohm: of last year, but it's been pretty much flat during 35 00:01:46,020 --> 00:01:48,540 Marcus Ohm: this period. But the healthcare market itself, a lot of 36 00:01:48,540 --> 00:01:52,830 Marcus Ohm: the numbers are actually generated by junior exploration companies. I 37 00:01:52,830 --> 00:01:54,720 Marcus Ohm: think when you look at the macro (inaudible) interest 38 00:01:54,720 --> 00:01:57,089 Marcus Ohm: rates, but you also look at the commodity prices, lithium's 39 00:01:57,090 --> 00:02:00,210 Marcus Ohm: come down significantly from the highs we had September last 40 00:02:00,210 --> 00:02:03,359 Marcus Ohm: year, and that's really impacts the listings because the numbers 41 00:02:03,360 --> 00:02:06,269 Marcus Ohm: we saw last time were really coming from those critical 42 00:02:06,270 --> 00:02:10,320 Marcus Ohm: mineral companies. So lithium, rare Earths, unfortunately, the prices come 43 00:02:10,320 --> 00:02:10,980 Marcus Ohm: down in both. 44 00:02:11,520 --> 00:02:13,800 Sean Aylmer: So the potential though is there, and I know you 45 00:02:13,800 --> 00:02:18,240 Sean Aylmer: are Perth based, Marcus, the potential there is for some 46 00:02:18,240 --> 00:02:21,809 Sean Aylmer: of those to come back if commodity prices rebound. I 47 00:02:21,809 --> 00:02:24,810 Sean Aylmer: mean, nickel's a bit tricky and lithium's probably tricky as 48 00:02:24,810 --> 00:02:28,739 Sean Aylmer: well, but still, if those prices come back, the chances 49 00:02:28,740 --> 00:02:31,470 Sean Aylmer: are that some of these explorers will come onto the 50 00:02:31,470 --> 00:02:32,280 Sean Aylmer: market at some point. 51 00:02:32,940 --> 00:02:35,490 Marcus Ohm: I think one of the challenges to me Sean, is also just 52 00:02:35,490 --> 00:02:38,730 Marcus Ohm: the sentiment. I think certainly if you look at commodities like 53 00:02:38,730 --> 00:02:41,969 Marcus Ohm: gold, the gold price is actually a really significant high at 54 00:02:41,969 --> 00:02:44,010 Marcus Ohm: the moment, but we're still not seeing a lot of gold 55 00:02:44,010 --> 00:02:46,080 Marcus Ohm: listings, and I can only put that down to just 56 00:02:46,080 --> 00:02:48,870 Marcus Ohm: the general levels of sentiment. So we'd really want to 57 00:02:48,870 --> 00:02:51,360 Marcus Ohm: see a bit of a prolong on the equity markets, 58 00:02:51,450 --> 00:02:54,840 Marcus Ohm: increases in the commodity prices, which are forecast going forward. 59 00:02:55,290 --> 00:02:57,749 Marcus Ohm: The lithium itself, which you mentioned earlier on, they've got 60 00:02:57,750 --> 00:03:01,800 Marcus Ohm: some real particular challenges there. The demand for EVs has 61 00:03:01,800 --> 00:03:04,080 Marcus Ohm: been less than predicted. So we've got a bit of 62 00:03:04,080 --> 00:03:06,269 Marcus Ohm: a glut of supply that's come on and that's really 63 00:03:06,300 --> 00:03:10,290 Marcus Ohm: what's impacted the prices. So that will improve going forward, 64 00:03:10,290 --> 00:03:13,169 Marcus Ohm: but we'd be talking going into 2025 I think, before 65 00:03:13,169 --> 00:03:16,019 Marcus Ohm: we have any meaningful improvement in those fundamentals. 66 00:03:16,919 --> 00:03:18,540 Sean Aylmer: What about the ones that have listed, I mean Guzman's 67 00:03:18,540 --> 00:03:20,520 Sean Aylmer: a good example and we all know that as a 68 00:03:20,520 --> 00:03:24,960 Sean Aylmer: brand name. What's happened to their share prices on that 69 00:03:24,960 --> 00:03:29,190 Sean Aylmer: first day and even subsequently have they tended to do okay? 70 00:03:30,450 --> 00:03:34,469 Marcus Ohm: GYG's an interesting case in itself. They didn't really offer 71 00:03:34,469 --> 00:03:36,810 Marcus Ohm: a lot of the total shares in issue to the 72 00:03:36,810 --> 00:03:41,280 Marcus Ohm: public, so there was only 20% was actually offered. So 73 00:03:41,280 --> 00:03:43,860 Marcus Ohm: the share price itself has stayed pretty... I think was 74 00:03:43,860 --> 00:03:46,020 Marcus Ohm: a good gain on the first day and also by 75 00:03:46,020 --> 00:03:48,630 Marcus Ohm: the end of June, but those shares are pretty tightly 76 00:03:48,630 --> 00:03:53,369 Marcus Ohm: held subject to escrow. The question that GYG is that valuation 77 00:03:53,369 --> 00:03:55,740 Marcus Ohm: in the standard longer term? I think that will be the question 78 00:03:55,740 --> 00:03:58,080 Marcus Ohm: that people will be asking once those shares are available 79 00:03:58,080 --> 00:03:58,201 Marcus Ohm: to trade. 80 00:03:58,200 --> 00:04:01,440 Sean Aylmer: Okay. And then the other one you mentioned was Metals 81 00:04:01,440 --> 00:04:03,510 Sean Aylmer: Acquisition, wasn't it? You said that that was the other 82 00:04:03,690 --> 00:04:07,440 Sean Aylmer: larger, not that $ 300 odd millions that large, but how'd 83 00:04:07,440 --> 00:04:08,610 Sean Aylmer: that one perform? 84 00:04:08,910 --> 00:04:10,859 Marcus Ohm: I'm not sure how the share prices gone there, Sean, 85 00:04:11,400 --> 00:04:15,150 Marcus Ohm: subsequent to listing, but it's an interesting company because it 86 00:04:15,150 --> 00:04:18,060 Marcus Ohm: is a materials listing that's a larger one during the 87 00:04:18,060 --> 00:04:21,960 Marcus Ohm: period that's actually been successful. They operate the CSA copper 88 00:04:21,960 --> 00:04:24,868 Marcus Ohm: mine in New South Wales, so I think that's a 40, 000 89 00:04:24,870 --> 00:04:28,500 Marcus Ohm: ton per annum copper operation and they're looking at further 90 00:04:28,559 --> 00:04:31,860 Marcus Ohm: acquisitions as well. So I think Metals Acquisition Limited, that 91 00:04:31,860 --> 00:04:33,390 Marcus Ohm: will be a watch and see and just see how 92 00:04:33,390 --> 00:04:34,890 Marcus Ohm: that sort of performs going forward. 93 00:04:35,400 --> 00:04:37,140 Sean Aylmer: Stay with me, Marcus. We'll be back in a minute. 94 00:04:43,170 --> 00:04:47,699 Sean Aylmer: I'm speaking to Marcus Ohm from HLB Mann Judd. We've 95 00:04:47,699 --> 00:04:50,850 Sean Aylmer: discussed the fact that there aren't many listings, I suppose 96 00:04:50,850 --> 00:04:53,339 Sean Aylmer: the other side is that they're big companies like the Canva of 97 00:04:53,339 --> 00:04:55,560 Sean Aylmer: the world, right? If that list, it'll list on Nasdaq 98 00:04:55,620 --> 00:04:58,828 Sean Aylmer: won't list here, and what I'm trying to get to 99 00:04:58,830 --> 00:05:03,059 Sean Aylmer: is how does the ASX 200 attract companies to list on 100 00:05:03,059 --> 00:05:05,669 Sean Aylmer: it? And maybe we'll never get Canva. Maybe that's the 101 00:05:05,670 --> 00:05:07,860 Sean Aylmer: case, but there must be a lot of mid- caps 102 00:05:07,860 --> 00:05:10,859 Sean Aylmer: and small caps that they can actually attract the money 103 00:05:11,520 --> 00:05:14,760 Sean Aylmer: beyond whatever the commodity price is doing, or is that 104 00:05:14,760 --> 00:05:15,539 Sean Aylmer: just not possible? 105 00:05:16,080 --> 00:05:18,599 Marcus Ohm: I think the Australian market, there are a lot of 106 00:05:18,599 --> 00:05:21,359 Marcus Ohm: advantages to listing on the ASX too because you get 107 00:05:21,360 --> 00:05:24,419 Marcus Ohm: a main board listing. The barriers to entry to listing 108 00:05:24,420 --> 00:05:27,719 Marcus Ohm: on the ASX are a fair bit lower than other exchanges around the 109 00:05:27,720 --> 00:05:31,320 Marcus Ohm: world, but we're never going to necessarily attract the huge 110 00:05:31,320 --> 00:05:34,799 Marcus Ohm: technology listings there because the investment capital is really in 111 00:05:34,800 --> 00:05:38,159 Marcus Ohm: the US. So TED listings themselves, I don't really see 112 00:05:38,160 --> 00:05:41,578 Marcus Ohm: that as a reflection of the market itself. It's more a 113 00:05:41,580 --> 00:05:44,520 Marcus Ohm: reflection of the interest rates and the macro environment I 114 00:05:44,520 --> 00:05:47,700 Marcus Ohm: think not being suitable for those types of listings. But 115 00:05:47,700 --> 00:05:50,219 Marcus Ohm: yeah, certainly going forward it'd be nice to see some 116 00:05:50,220 --> 00:05:52,950 Marcus Ohm: non materials listings coming through Sean, but I think really 117 00:05:52,950 --> 00:05:54,599 Marcus Ohm: we've just got to wait for the wider environment to 118 00:05:54,599 --> 00:05:56,159 Marcus Ohm: try and sort itself out a little bit. 119 00:05:56,790 --> 00:05:59,010 Sean Aylmer: And you'd expect that there won't be a huge amount 120 00:05:59,010 --> 00:06:01,050 Sean Aylmer: of listings for, I mean at least until rates start 121 00:06:01,050 --> 00:06:05,610 Sean Aylmer: falling commodity prices in some sectors bounce back. So we're 122 00:06:05,610 --> 00:06:07,080 Sean Aylmer: probably talking into next year really. 123 00:06:07,440 --> 00:06:10,469 Marcus Ohm: Yeah, we have done some analysis, HLB, going back for 124 00:06:10,469 --> 00:06:12,570 Marcus Ohm: a number of years, and we do see a little 125 00:06:12,570 --> 00:06:15,360 Marcus Ohm: bit of an uptick in the final quarter of each 126 00:06:15,360 --> 00:06:17,760 Marcus Ohm: year. So I do expect a few more listings to 127 00:06:17,760 --> 00:06:21,660 Marcus Ohm: come through, but certainly nothing too major. One of the 128 00:06:21,660 --> 00:06:24,839 Marcus Ohm: problems we had back at the Lifestyle BA meeting, which 129 00:06:24,839 --> 00:06:26,488 Marcus Ohm: was in June, was there was actually talk of an 130 00:06:26,490 --> 00:06:29,010 Marcus Ohm: interest rate rise there. So I think we'll get a 131 00:06:29,010 --> 00:06:31,559 Marcus Ohm: little bit more clarity in August, but certainly what we're 132 00:06:31,559 --> 00:06:34,589 Marcus Ohm: expecting is it's going to be going into FY 25 133 00:06:34,589 --> 00:06:39,150 Marcus Ohm: before we... come to year 25 before we see any meaningful improvement. 134 00:06:39,839 --> 00:06:41,580 Sean Aylmer: And do you have a sense that in terms of 135 00:06:41,580 --> 00:06:43,859 Sean Aylmer: capital raisings where they're up to, so we've been talking 136 00:06:43,860 --> 00:06:48,210 Sean Aylmer: about initial public offerings, but even raising money outside IPOs, 137 00:06:48,210 --> 00:06:51,479 Sean Aylmer: so companies that are already listed, is there much of that around? 138 00:06:51,928 --> 00:06:55,200 Marcus Ohm: Yeah, that's a really mixed bag at the moment. What 139 00:06:55,200 --> 00:06:58,770 Marcus Ohm: we're generally seeing is if you've got a very strong 140 00:06:58,860 --> 00:07:01,830 Marcus Ohm: company in terms of either a project or the offering and 141 00:07:01,830 --> 00:07:04,980 Marcus Ohm: it's backed by solid management, those companies are generally doing 142 00:07:04,980 --> 00:07:08,460 Marcus Ohm: okay on the secondary listing front, but other companies are 143 00:07:08,460 --> 00:07:11,940 Marcus Ohm: really struggling. We found that just the sentiment has disappeared 144 00:07:11,940 --> 00:07:14,790 Marcus Ohm: in terms of those secondary listings. So a fair few 145 00:07:14,790 --> 00:07:18,030 Marcus Ohm: companies are actually really struggling to raise money. So hopefully 146 00:07:18,030 --> 00:07:20,910 Marcus Ohm: we'll get that improvement in the sentiment. It's not there yet, 147 00:07:21,000 --> 00:07:22,770 Marcus Ohm: but we are hoping that's going to be there in the not 148 00:07:22,770 --> 00:07:23,670 Marcus Ohm: too distant future. 149 00:07:24,450 --> 00:07:27,030 Sean Aylmer: I suppose the longterm issue for this is that if 150 00:07:27,030 --> 00:07:29,399 Sean Aylmer: companies can't raise money, they can't invest, and if you 151 00:07:29,400 --> 00:07:33,900 Sean Aylmer: invest, hopefully that provides a return and the company grows, 152 00:07:33,900 --> 00:07:36,570 Sean Aylmer: the economy grows. So it is a problem for Australia 153 00:07:36,570 --> 00:07:38,340 Sean Aylmer: if we're just not being able to raise money, we're 154 00:07:38,340 --> 00:07:40,559 Sean Aylmer: not getting new listings, that's kind of one side. And 155 00:07:40,559 --> 00:07:43,469 Sean Aylmer: then the other side is that people mean superannuation, we're 156 00:07:43,469 --> 00:07:46,709 Sean Aylmer: all putting 11.5% in money's got to go somewhere. We'd 157 00:07:46,709 --> 00:07:49,470 Sean Aylmer: like it to go local as well as international. And 158 00:07:49,530 --> 00:07:51,900 Sean Aylmer: if we don't have a big enough pool of options 159 00:07:52,110 --> 00:07:54,600 Sean Aylmer: of listed equities here, more of it's going to go 160 00:07:54,690 --> 00:07:57,540 Sean Aylmer: international. So those two sides of it, I mean, should 161 00:07:57,540 --> 00:08:00,029 Sean Aylmer: we be worried first that we're not investing enough for 162 00:08:00,030 --> 00:08:03,030 Sean Aylmer: the future? Then the second question is about where we're 163 00:08:03,030 --> 00:08:03,809 Sean Aylmer: investing the money. 164 00:08:04,500 --> 00:08:07,740 Marcus Ohm: I think with those super funds, they generally wouldn't invest 165 00:08:07,740 --> 00:08:11,910 Marcus Ohm: in those smaller junior cap miners. I think with the 166 00:08:11,910 --> 00:08:15,300 Marcus Ohm: general sentiment matter that we're seeing at the moment, we 167 00:08:15,300 --> 00:08:19,110 Marcus Ohm: see this with the historical analysis of the IPO market going back 168 00:08:19,110 --> 00:08:22,379 Marcus Ohm: for a very considerable period of time that it's extremely 169 00:08:22,379 --> 00:08:25,140 Marcus Ohm: cyclical. We do get these big ups and downs. It 170 00:08:25,170 --> 00:08:27,780 Marcus Ohm: was only back in 2021 when we actually had record 171 00:08:27,780 --> 00:08:32,189 Marcus Ohm: numbers of IPOs happening. So we do get these rises 172 00:08:32,190 --> 00:08:36,030 Marcus Ohm: and falls with both initial secondary listings. It's a feature 173 00:08:36,030 --> 00:08:38,279 Marcus Ohm: of the market in particular, and I think management are 174 00:08:38,280 --> 00:08:41,430 Marcus Ohm: well attune to actually having to deal with that. So 175 00:08:41,520 --> 00:08:43,949 Marcus Ohm: sometimes it's batten down the hatches and try and minimize 176 00:08:43,950 --> 00:08:48,030 Marcus Ohm: the cash flows. Expiration expenditure for some commodities, for example, 177 00:08:48,030 --> 00:08:50,220 Marcus Ohm: in the mining industry has been coming down for a 178 00:08:50,220 --> 00:08:53,460 Marcus Ohm: number of years now just based on those secondary capital 179 00:08:53,460 --> 00:08:56,280 Marcus Ohm: markets. But again, I do expect that to improve in 180 00:08:56,280 --> 00:09:00,629 Marcus Ohm: the future. Once commodity prices go up and equity performance 181 00:09:00,629 --> 00:09:02,880 Marcus Ohm: improves, we tend to see an improvement in the secondary 182 00:09:02,880 --> 00:09:05,939 Marcus Ohm: raising market quite quickly. So hopefully that's what will occur 183 00:09:05,940 --> 00:09:06,600 Marcus Ohm: going forward. 184 00:09:07,140 --> 00:09:09,090 Sean Aylmer: Let's hope so. Marcus, thank you for talking to Fear 185 00:09:09,090 --> 00:09:09,539 Sean Aylmer: and Greed. 186 00:09:09,900 --> 00:09:10,649 Marcus Ohm: Thank you very much. 187 00:09:11,099 --> 00:09:14,249 Sean Aylmer: That was HLB Mann Judd's Marcus Ohm author of the 188 00:09:14,250 --> 00:09:17,100 Sean Aylmer: IPO Watch Report. This is the Fear and Greed business 189 00:09:17,100 --> 00:09:19,980 Sean Aylmer: interview. Remember, this is general information only and you should 190 00:09:19,980 --> 00:09:23,429 Sean Aylmer: seek professional advice before making investment decisions. Join us every 191 00:09:23,429 --> 00:09:25,590 Sean Aylmer: morning for the full episode of Fear and Greed, business 192 00:09:25,590 --> 00:09:27,809 Sean Aylmer: news for people who make their own decisions. I'm Sean 193 00:09:27,809 --> 00:09:29,339 Sean Aylmer: Aylmer, enjoy your day.