"Had you invested in every private equity-backed float from the start of 2013, including some of the poorer performers, you would today be sitting on a portfolio return of 48%."

Deloitte recently released their 2016 IPO Report, produced in collaboration with mergers & acquisitions (M&A) intelligence provider, Mergermarket. The report surveys that the 2015 IPO market saw:

· 97 ASX IPO listings (up 33% over 2014), with a market capitalisation of $17.6 billion and capital raised in excess of $8.6 billion

· Market capitalisation down by 32% (2014 included Medibank Private, the third largest listing globally)

· Average gains of 18%, weighted by market capitalisation

· Extended gains for 2014 listings, which closed the year 37% above their 2014 listing price.

Deloitte Corporate Finance partner David Hagger, who leads the firms’ Transaction Services team in Parramatta, notes that “Volatility in China and falling commodity prices have created an unsettling environment for equity investors. However, IPOs remained stock market darlings in 2015, dominated by the technology and financial services sectors”.

Funding growth objectives was the theme common to the majority of listings, and the numbers tell the story. From the list of the top performing IPOs for the year, the majority are small and mid-cap growth stocks; largely in the technology and related sectors, which raised less than $50 million of capital.

“We saw a significant number of private vendors selling into the deals but still retaining substantial holdings, demonstrating their commitment to the post-listing growth of their businesses. The majority of non-private equity vendors are floating their businesses to raise capital for future growth and to achieve liquidity; rather than electing to realise their investment at IPO”, Hagger said.

Paul Childers is the partner who runs Deloitte’s M&A Advisory practice in Western Sydney. “I believe that the results of private equity-backed listings are far more positive than popular media suggests. Had you invested in every private equity-backed float from the start of 2013, including some of the poorer performers, you would today be sitting on a portfolio return of 48%. The results really speak for themselves.”

As for 2016, the outlook remains positive, although there is a heightened focus on the quality of the companies coming to the Exchange; in particular, on their growth strategies and the strength of the management team in place for the IPO.

From a Western Sydney perspective, there continues to be strong interest from the investor market in gaining exposure to the engine room of the NSW economy; with a focus on businesses generating sustainable operating cash flows and re-investing in research and development and enhancing their local capability.

Deloitte’s recently launched economic blueprint, Shaping Future Cities: Designing Western Sydney, identified some of the key strategies that local business should be employing to position their business for growth and these same factors would play well to fund managers looking at IPO: For example, leveraging links with offshore regions like China and India, focusing on innovation in health, education and more advanced manufacturing.