With expectations growing that IPO activity will pick up in 2025, professionals say Australia is an attractive listing destination that “punches above its weight”.

Speaking at a media event in Sydney last week, ASX chief executive Helen Lofthouse expressed optimism for the year ahead, noting that “there are a lot of conversations happening” despite the uncertain macroeconomic environment.

“The thing about IPOs is that it’s a matter of trust and it’s a very cyclical market,” she said.

"If you look at what's been going on over the last few years, you've had real questions about the macro economy — what's going on with inflation and with interest rates — and of course, for a founder of a company, that's one of the most important decisions they're going to make, where they're going to go, so the change in inflation, the change in inflation rates has created that uncertainty.

However, market valuations remain resilient, Lofthouse notes.

"A lot of these founders probably look back and say, 'Maybe we should have actually gone ahead with this,'" she said.

The window is "absolutely open" for the right companies to list, the ASX chief executive reiterated, adding the listing time will only become more attractive as markets feel more comfortable with the outlook for inflation in the next year, I will also stabilize the interest rates.

According to Barrenjoey Capital Partners co-executive chairman Guy Fowler, the firm has already seen more talk of initial public offerings in the past two months than in the previous three years, indicating it is "generating interest" in Australia's listed markets.

While the market is still "not red hot," there is reason for optimism, he said.

“Maybe not the end of 2024, but 2025. it looks a lot better than 2023,” Fowler said.

Previous ASX analysis suggested there was $7 billion in net new capital added to the exchange so far in the five months to the end of May.

In a material written to the ASX last month, ASX listings manager Kate Galpin noted that the range of new listings "looks promising" in the second half of the year, including companies in the industrials, mining and consumer discretionary sectors.

She also pointed to the cyclical nature of IPOs, resulting in a relatively slow period, and the observed macroeconomic headwinds had "played a role in reducing the number of new listings globally last year and the ASX was no exception".

A place for reforms

Reflecting on the Australian bourse as a listing destination, ASX chief executive Lofthouse said it was "definitely comfortable" with its level of attractiveness to domestic and foreign companies.

According to the latter ASX Group Monthly Activity Reportthere were about 2,155 entities listed on the exchange last year, slightly less than 2,255 in the previous corresponding period.

However, Lofthouse reiterated that the ASX "punches above its weight as a listings destination".

“We compete on a global stage and do so very effectively, consistently in the top 10 list of listing locations. It's a very attractive market,” she said.

“We have significant capital in Australia looking for investment opportunities. We're seeing companies get earlier inclusion in the index here, which is really attractive, [and] we see that valuations are attractive to companies.”

Barrenjoey's Fowler also outlined Australia as a "very good" market to access capital, pointing to the fact that Australian companies are valued at premiums to their global peers in a number of sectors and its banks remain the world's most expensive banks.

But, he argues, there remain differentiating factors compared to global exchanges that could be improved, namely adapting the need for prospectus forecasts and shortening the listing timeframe.

“In the US, you don't have to make predictions. For a high-growth company, that could be attractive,” Fowler said.

"It's hard to put a marker in the sand and say, 'This is definitely where it's going to be next year.' I understand why we have this, but it's worth a debate.'

He also explained that the timeline between seeking an IPO and starting to trade on the ASX is longer than other markets, which can be a particularly "nervous" time for entrepreneurs.

“In a volatile market, you want it to be as short as possible. I'm sure we'll get to it, but are there things we can do to shorten that time frame?” Fowler said.

“You can do an IPO in [US] – from the time you go public to the time you trade – in two weeks and it's longer here. We need to check this out.