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News and discussions from Novus Capital

JobKeeper 2.1 – Economic Response to the Coronavirus

Gavan Farley - Monday, September 07, 2020

JobKeeper 2.1 – Economic Response to the Coronavirus


ASIC Interim Corporate Plan 2020-21

Gavan Farley - Thursday, August 20, 2020

ASIC Interim Corporate Plan 2020-21

JobKeeper 2.0 – Extended to March 2021 with some changes.

Gavan Farley - Tuesday, August 04, 2020

Date: 27 July 2020

Reference: Federal Treasury

On 21 July 2020, and due to the ongoing coronavirus economic crisis, the Australian Government announced that iswould extend the JobKeeper Payment until 28 March 2021. However, it will be reduced twice. From 28 September 2020 the $1500 wage subsidy will be reduced to:

  • $1200 per fortnight full-time workers – those that work above 20 hours per week; and
  • $750 per fortnight part-time workers – those that work less than 20 hours per week.

From 4 January 2021, it will be further reduced to:

  • $1000 per fortnight for full-time workers; and
  • $650 per fortnight for part-time workers.

There are also changes to the way in which eligibility for the scheme will be assessed.

From 28 September 2020:

  • Business and not-for-profits seeking to claim the JobKeeper Payment will be required to demonstrate that they have suffered an ongoing significant decline in turnover using actual GST turnover (rather than projected GST turnover).
  • They will be required to reassess their eligibility with reference to their actual GST turnover in the June and September quarters 2020. They will need to demonstrate that they have met the relevant decline in turnover test in both of those quarters to be eligible from 28 September to 3 January 2021.

From 4 January 2021:

  • Business and not-for-profits will need to further reassess their turnover for eligibility. They will need to demonstrate that they have met the relevant decline in turnover test with reference to their actual GST turnover in each of the June, September and December quarters 2020 to remain eligible from 4 January 2021

The proposed changes to the scheme will be brought into legal effect once the Treasurer registers a Legislative Instrument to amend and/or supplement the Legislative Instrument titled the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020.

For more information in relation not the extension of the JobKeeper payment please refer to https://treasury.gov.au/sites/default/files/2020-07/Fact_sheet-JobKeeper_Payment_extension.pdf

Capital Raising – Placement Q&A

Gavan Farley - Wednesday, May 13, 2020

Capital Raising – Placement Q&A

1.What is the quickest way to raise capital?

One of quickest way for a listed company to raise capital is to make a placement of shares to a group of sophisticated or professional investors.

This is the quickest route to raising equity capital as the issuing company is not required to prepare and lodge a prospectus (a disclosure document) with the ASIC.

2.Are there requirements that have to be satisfied in making a placement to sophisticated or professional investors?

Yes. There are a number of requirements.

1.Each investor needs to qualify as a sophisticated or professional investor in accordance with the requirements of section 708 of the Corporations Act 2001 (Cth) (Corporations Act). The main categories of persons that would qualify as a sophisticated or professional investor are:

•an investor that is purchasing at least $500,000 of shares in the offer;

•an investor that holds or controls net assets of at least $10 million (e.g. a fund manager); and

•an investor that has a certificate from an accountant that says they have the required level of net assets or gross income.

2.The issuing company will need to comply with the requirements of the ASX Listing Rules in making the offer. These include:

•not issuing more than 15% of its capital in any 12 months period: ASX Listing Rule 7.1. Note the ASX has temporarily lifted the 15% limit to 25%, conditional on the company combining the placement with an entitlement offer or a follow-on offer to retail investors under a security purchase plan. See our focus paper: "Capital Raisings During COVID-19" for more information on the conditions for being able to utilise this uplift;

•complying with the requirements of ASX Listing Rules 10.11 and 10.12 and the relevant provisions of the Corporations Act in relation to offers to related parties. Generally shareholder approval will be required to issue placement shares to a director or other related party - so for a fast capital raise – related parties should not be offered shares in a placement. However, we understand that the ASX is taking a pragmatic view on waiver requests where a placement offer is made to related parties;

•considering whether a trading halt is required whilst the issuing company is investigating a capital raising. A listed company proposing to raise capital will need to make an announcement to the market under Listing Rule 3.10.3 as soon as it commits to proceed with the capital raising. This is usually done on ASX Form Appendix 3B. A trading halt will assist with management of the announcement and the capital raising. In conjunction with the temporary uplift in placement capacity, ASX will also permit companies to request back-to-back trading halts (i.e. up to a total of 4 trading days) to consider, plan and execute capital raising;

•complying with continuous disclosure requirements under Listing Rule 3.1. Generally, the raising of capital by an ASX listed company would be subject to continuous disclosure obligations. As such, it would be important to ensure that proposed placement parties are subject to confidentiality obligations to be able to fall within the incomplete proposal exception to the disclosure requirements, until the capital raising is finalised.

3.Should I have an underwriter for the placement?

If you can procure an underwriter at this time it will give confidence to investors that the full placement will proceed. In this market it is more likely that a broker or investment bank will want to manage, rather than underwrite, an issuing company’s placement. Again, although not underwriting, management of the placement by a broker or investment bank will give some confidence to the market that the placement in total will proceed.

An underwriter or placement manager will usually conduct a due diligence review of the issuing company before committing to becoming involved – usually by issuing a due diligence questionnaire to the officers of the issuing company to answer.

4.Can I have an investor that agrees to sub-underwrite or take a fixed % of the placement if others don’t take it up?

One issue to watch out for is the requirement to comply with the substantial shareholder notice provisions of the Corporations Act. These require the lodgement of a notice to the ASX where an investor’s voting power in an issuing company is 5% or more, and a further updated notice, where their voting power was at 5% or more and it changes by 1 percentage point or more.

Also, an investor should not be issued shares in the placement if their voting power in the issuing company will exceed 19.9%. If it does, and the circumstances of the issue do not fall within one of the relevant exceptions in the Corporations Act, they may be breaching the takeover provisions of the Corporations Act.

5.Will an investor be able to on-sell their offer shares on the ASX immediately after they are issued to them?

It depends.

On-sale by an investor within 12 months would usually require the issue of a prospectus unless it comes within one of the exceptions in section 708, for example an on-sale to a sophisticated or professional investor (refer to question 2 above Are there requirements that have to be satisfied in making a placement to sophisticated or professional investors?)

However, there are certain exceptions in the Corporations Act to allow the on sale by an investor of the shares they are issued in a placement.

The principal exception is known as case 1 (sale offer of quoted securities). This exception requires that:

•the offer shares must have been continuously quoted for 3 months before the issue of the offer shares;

•trading in the offer shares was not suspended for more than 5 days in the last 12 months before the issue of the offer shares. However, see ASIC 20-075MR issued 31 March 2020 where the ASIC outlines the terms on which it has extended in certain cases this 5 days to 10 days. See our focus paper "Capital Raisings During COVID-19" for more information on this; and

•the issuing company has given a cleansing notice to the ASX before the securities are able to be sold on the market.

There are some other technical requirements which will not be covered in this note – see section 708A (5) and (6) of the Corporations Act.

6.What is a cleansing notice?

A cleansing notice is a notice that complies with section 708A (6) of the Act. It must state that:

•the issuing company issued the offer shares without disclosure to investors;

•the notice is given in accordance with case 1 in section 708A (5); and

•as at the date of the notice, the body has complied with:

oits financial reporting obligations in Part 2M of the Act; and

oits continuous disclosure obligations in section 674 of the Act.

The cleansing notice must also include any information that is “Excluded Information” as at the date of the notice.

7.What is “Excluded Information”?

This is information that has not previously been disclosed to the market because of the exceptions to the continuous disclosure obligations in ASX Listing Rules 3.1A but investors and their professional advisers would reasonably require the information to be disclosed (and expect to see the information in a prospectus, if a prospectus was required to be issued by the company) in order to make an informed assessment of:

•the assets and liabilities, financial position and performance, profits and losses and prospects of the issuing company; or

•the rights and liabilities attaching to the offer shares.

This requirement will usually mean that, before the placement is effected, the issuing company will update the market with any market sensitive information which has not previously been disclosed, including information which may have been excluded as a result of the exceptions in Listing Rule 3.1A.

This requirement can sometimes be time consuming as it will usually involve a due diligence investigation into the issuing company involving the board, management and usually the issuing company’s lawyers and accountants.

8.Are there any other matters that I need to be concerned about?

As mentioned above, the issuing company will need to liaise with the ASX in relation to a number of matters including:

•calling a trading halt;

•lodging an Appendix 3B (New Issue Announcement);

•lodging an Appendix 2A (Application for Quotation of Securities); and

•providing the work sheet with the calculations of available issue capacity under Listing Rules 7.1 and 7.1A.

9.What restrictions are there on the issue price of the offer shares?

The price at which the offer shares are issued is a matter to be determined by the Board of the issuing company having regard to a range of factors including the current market price of the issuing company’s shares, the expected discount expected by investors in the current market and the expected dilution of current shareholders by the issue of the offer shares.

Indeed, the expected dilution of current shareholders may be a reason why the Board of an issuing company may decide to have a placement followed by an entitlement offer to existing shareholders or an SPP (share purchase plan).

Novus’ Response to the COVID – 19 Pandemic - A Note from our Managing Director

Gavan Farley - Friday, March 27, 2020


Novus’ Response to the COVID – 19 Pandemic - A Note from our Managing Director


Update Novus' Response to COVID-19

Gavan Farley - Friday, March 20, 2020


Further to earlier advice received, we wish to re-confirm that Novus’ position and response in relation to COVID-19 is aligned to those of the Department of Health, State Health Authorities and Department of Foreign Affairs and Trade (DFAT).

Novus is conducting ongoing and real time reviews to determine if additional measures are needed.

Novus business resilience and continuity

  • Novus’ Business Continuity Management System is implemented to the ISO 22301 standard.
  • Novus’ Business Resilience & Continuity framework aims to ensure:
    • the safety of our community and clients
    • the continued provision of key client services and operations.


  • Novus has created a COVID-19 Response Team to continually monitor, review and manage our response to the evolving situation. Ongoing reviews include managing the current and potential impacts on our working community, office locations, operations and client services.
  • Our Business Continuity Plans are for all locations across Australia including all core systems that supports Novus’ capability to recover business operations in the event of any significant disruption to our core systems.
  • Novus has already tested out the work from home capabilities and remote office locations on varying days, with varying staff and we confirm that all IT requirements have been updated and infrastructure improved to ensure that no disruptions have occurred. We confirm all testing to be complete.


As per the latest announcement from Prime Minister Morrison, anybody who arrived in Australia from midnight 15 March 2020 is required to self-isolate for 14 days.

You must work from home for 14 days and seek medical clearance before returning to the office if:

  • You have had close contact with someone who has or is suspected of having COVID-19; and
  • You have symptoms of COVID-19 (a cough, high temperature, shortness of breath).

For the safety of our community, you must also stay away from the office if you have any flu-like symptoms or are feeling unwell.

Please contact either Wayne Gooley, Sara Harman or myself, if you or your family require any assistance.

Client Meeting and events

  • All internal and external firm events will be limited to a maximum of 20 persons. These events are only to go ahead if they are necessary and you will be required to obtain written Management approval prior.
  • Our advice to all Advisors is that all client meetings that were to occur face to face are changed to a teleconference method and that all clients do not attend Novus’ offices for the safety of our community and the health of our clients. Further we would encourage all Advisors to refrain from visiting clients, and instead, offer a teleconference discussion.


  • All international travel has been cancelled with immediate effect.
  • Only essential domestic travel is allowed and it is completely voluntary.

As part of our working culture, we embrace flexibility and we are confident that these changes will not impact or disrupt services. We are working closely with our third-party platform providers to ensure the service levels are continued to be met despite the disruptions to their business operations as well.

We are confident that we have the appropriate processes and measures in place and will continue to monitor the situation.

If you have any questions in relation to Novus’ response to COVID-19, please contact Zainab Adams-Kathrade, Head of Legal & Compliance, Novus Capital Limited on 0426 173 116 or via email Zainab.Adams-Kathrada@novuscapital.com.au.

IPO Watch Australia

Gavan Farley - Wednesday, February 05, 2020

A Review of Australia's 2019 IPO Activity


ASX Tech Index to Drive Listings as IPOs Slow

Gavan Farley - Monday, December 23, 2019


ASX Tech Index to Drive Listings as IPOs Slow

The creation of a new index to track and invest in the fast growing technology stocks on the Australian Securities Exchange will help boost the number of tech IPOs locally in 2020, experts say, as new figures show the number and value of ASX listings fell in 2019.

On Monday, the ASX revealed plans to create a Nasdaq-style S&P/ASX All Technology index from February, and executive general manager of listings and issuer services, Max Cunningham, said it would push new companies to a pipeline of listings next year, which already looked like outstripping 2019.

Despite the number of IPOs being down on 2018 both locally and globally, tech stocks represented the highest number of new listings on the ASX. In total, 90 new stocks are expected to have listed by the end of 2019.

"This is always caveated with volatility in markets, but we've probably never had a better [tech] pipeline,'' Mr Cunningham said. "Next year looks big in terms of size, and also the number of tech companies, which has been coming in at around 12 to 15 each year ... we may have a few more next year."

Figures compiled by the ASX show the local IPO market was down 21 per cent in terms of capital raised in 2019, from $8.5 billion to $6.7 billion as at December 12. Dealogic data, meanwhile, showed that the global IPO market was down 12 per cent year-on-year.

While the ASX's push is still small in comparison with the Nasdaq's dominance of global tech listings, Mr Cunningham said US exchanges had been heavily focused on tech for 30 years, in comparison to five years at the ASX.

He said Australian tech stocks were more heavily weighted towards business-to-business companies such as WiseTech and Xero than the US boards, where big consumer brand names including Facebook and Apple were traded, but there was huge potential for it to grow along with the local tech sector.

"I think the important distinction is we are bringing companies to market earlier than US IPOs, which means earlier access to institutional investors and bringing more diversity to investors," Mr Cunningham said.

"Tech is 20 per cent of the S&P 500, whereas IT currently makes up just 6 per cent of the ASX 200 index by number of companies, and only 2.5 per cent by market cap."

Reaction to the announcement of the new tech stock index was largely positive, but analysts were divided about its potential to drive a larger locally listed tech sector.

Mark Bryan, the head of research at Wilsons, said it was a strategically sound initiative that would raise visibility in the domestic sector while providing investors with more options.

"Over the last decade we have experienced an infusion of high quality tech plays on to the ASX,'' he said. "Any initiatives to further raise visibility and cement the ASX as a leading global exchange for small- to mid-cap technology names is a positive."

Mr Bryan said companies included on the index could experience a "network effect", and benefit from being classified alongside well-established tech companies such as Xero, Bravura and TechnologyOne.

However, senior technology equities analyst at Morningstar, Gareth James, said he doubted an index would overcome Australia's disadvantage of being so far away from large investor bases in the US and Europe.

Big challenge

"Considering the size and composition of Australia’s economy and population, it’s unlikely that Australia will ever be a material source of technology companies from a global perspective," he said.

"For most overseas companies, there's little logic in listing in such a remote region unless they are so small and so early stage that they are unable to list elsewhere in the world.

"However, this creates the issue for the ASX that they risk attracting small and high-risk companies, which kind of defeats the logic of what they are trying to achieve."

Hugh Bickerstaff, the global chief investment officer at angel investor group Investible, was more positive about the long-term potential of the local tech industry.

He said the new tech index represented a natural progression in the ecosystem and was recognition of the increasing strength and maturity of local entrepreneurs and investors.

It would allow Australian tech founders to access larger pools of capital earlier and from a much broader investor base.

"Retail investors will also be able to access and support Australian tech companies in a more liquid fashion," Mr Bickerstaff said.

"This will encourage early stage investors to support Australian tech startups, as there will potentially be a new pathway to liquidity in early stage investing. And these events will be able to occur earlier due to the lower thresholds."

The general manager of industry group FinTech Australia, Rebecca Schot-Guppy, said the AllTech Index represented a good first step towards highlighting the success of listed technology companies in Australia to the broader investment community.

"Work will have to go into promoting this index, as the market by default will still focus on the ASX 100 and its top 20 companies. Hopefully, the performance of its companies will turn heads," she said.

"Over time, it would be interesting to see this index narrowed even further into categories of technology, like fintech. Technology is ubiquitous and leveraged in every new company, so even the phrase ‘technology company’ could become redundant over the next decade."

Co-founder of video technology startup Shootsta, Tim Moylan, said going public remained a complex process for emerging companies, but he believed the profile and credibility offered to companies able to make the ASX's new index would encourage some to investigate their options.

"It’s a badge of honour and credibility to be part of the ASX 100, so if the ASX creates a similar but smaller list for top technology companies on this index and promotes it, then it could encourage more technology companies to list locally instead of overseas," he said.

"It could also encourage them to dual-list and get exposure to a larger market, but also the benefit of being able to promote their top position on the ASX."

Source: Finanical Review


New edition of ASX Corporate Governance Council’s Principles and Recommendations Released

Gavan Farley - Thursday, April 04, 2019


On 27 February 2019, the ASX Corporate Governance Council (Council) released the fourth edition of the ASX Corporate Governance Principles and Recommendations (Recommendations). The Recommendations apply to all entities listed on the ASX, but are also useful for non-listed companies that are looking to implement best practices.

The updated Recommendations will take effect on 1 January 2020 for entities with a 31 December balance date, and on 1 July 2020 for entities with a 30 June balance date. Entities are encouraged to adopt these Recommendations earlier if possible.

What has changed?

The key changes to the Recommendations revolve around the culture and values of entities in the context of community trust and confidence. The Council ‘considers it imperative’ that listed entities align their culture and values with community expectations in light of a number of examples of listed entities falling short.

The wording in the Recommendations has been changed to state that an entity must ‘instil’ and ‘continually reinforce’ the culture of the organisation, suggesting that there is an ongoing positive obligation on the Board to maintain the appropriate cultural standards and oversee its progress. The new Recommendations contain 35 recommendations as compared to the 29 recommendations in the 3rd edition of the ASX Corporate Governance Principles and Recommendations.

Out of thirty-five Recommendations, the following are entirely new recommendations for listed entities:

  • Recommendations 3.1 – to articulate and disclose its values to the public;
  • Recommendation 3.3 – to establish maintain and disclose a whistle-blower policy and ensure that the board (or a committee of the board) is informed of any material incidents reported;
  • Recommendation 3.4 – establish and disclose an anti-bribery and corruption policy, and ensure that the board or a committee of the board is informed of any breaches;
  • Recommendation 4.3 – to disclose its process to verify the integrity of any periodic corporate report that it releases to the market that is not audited or reviewed by an external auditor. This raises the bar for corporate reporting best practices;
  • Recommendation 5.2 – ensure that its board receives copies of all material market announcements promptly after they are made;
  • Recommendation 5.3 – a listed entity that gives a new substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform prior to the presentation in order to ensure equality of information among investors;
  • Recommendation 6.4 – ensure that all substantive resolutions at a meeting of security holders are decided by a poll, rather than by a show of hands, as a show of hands is thought to be inaccurate; and

The following four Recommendations have been updated and elaborated:

  • Recommendation 1.5 –disclose the full text of its diversity policy and disclose measureable objectives set for a reporting period to achieve gender diversity. The suggested objective is no less than 30% of each gender for directors. Previously, the Recommendations suggested that entities only disclose a summary of their diversity policy;
  • Recommendation 2.2 – it is suggested that a board should now disclose and regularly review its skills matrix to help the board identify any gaps in collective skills of the entity that need to be addressed. This will also assist with succession planning for management; and
  • Recommendation 2.6 – it is recommended that a listed entity should have a program for inducting new directors. There should also be a program for periodically reviewing if there is a need for existing directors to undertake professional development, legal training on framework and duties as a director, as well as induction training.
  • Recommendation 8.1 – in addition to the board of a listed entity being required to have a remuneration committee with at least three members, a majority of whom are independent directors, a listed entity included in the S&P/ASX 300 Index is now required under Listing Rule 12.8 to have a remuneration committee comprised solely of non-executive directors for the entire duration of that financial year.

There are also new Recommendations which are perhaps more uniquely relevant to some listed entities:

  • Recommendation 9.1 – if a director of a listed entity does not speak the language that board meetings are held in, the entity should disclose the process it has in place to ensure the director understands and contributes to discussions at board meetings (such as providing translation copies of material documents to be tabled). This is to assist the director to discharge his/her directors’ duties; and
  • Recommendation 9.2 – if a listed entity is established outside Australia, it should ensure that meetings of securityholders are held at a reasonable place and time;
  • Recommendation 9.3 – if a listed entity is established outside Australia has an AGM, or where an externally managed listed entity has an AGM, the entity should ensure that its external auditor attends its AGM and is available to answer questions from securityholders relevant to the audit.

What remains the same?

The new Recommendations maintains the same flexible non-mandatory ‘if not, why not’ approach to disclosure, whereby a Board is entitled to not adopt a principle, but must explain why it has not adopted the recommended approach.

The new Recommendations have the same structure of eight core principles and accompanying supporting recommendations. The eight core principles are as follows:

  1. Lay solid foundations for management and oversight: A listed entity should clearly delineate the respective roles and responsibilities of its board and management and regularly review their performance.
  2. Structure the board to be effective and add value: The board of a listed entity should be of an appropriate size and collectively have the skills, commitment and knowledge of the entity and the industry in which it operates, to enable it to discharge its duties effectively and to add value.
  3. Instil a culture of acting lawfully, ethically and responsibly: A listed entity should instil and continually reinforce a culture across the organisation of acting lawfully, ethically and responsibly.
  4. Safeguard the integrity of corporate reports: A listed entity should have appropriate processes to verify the integrity of its corporate reports.
  5. Make timely and balanced disclosure: A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities.
  6. Respect the rights of security holders: A listed entity should provide its security holders with appropriate information and facilities to allow them to exercise their rights as owners effectively.
  7. Recognise and manage risk: A listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework.
  8. Remunerate fairly and responsibly: A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders and with the entity’s values and risk appetite.

How does this affect you?

You should consider the latest Recommendations in detail and update your policies where necessary to comply with the new Recommendations.

If you are a listed entity with a full financial year commencing on or after 1 January 2020, you are required to report against these new Recommendations from 1 January 2020.

If you are a listed entity with a full financial year commencing on or after 30 June 2019, you are required to report against these new Recommendations from 1 July 2020.



Australian IPO Report 2018 - HLB Mann Judd

Gavan Farley - Wednesday, February 20, 2019

Total funds raised in initial public offerings (IPOs) in 2018 hit $8.44 billion, up 106 per cent on the 2017 total of $4.09 billion, although the pipeline into 2019 reflects a softening of the market, according to the latest HLB Mann Judd IPO Watch report.

“Despite the increase in funds raised, there were only 93 initial public offering (IPO) listings on the ASX in 2018, down from the 110 new market entrants in the previous year, but in line with the five year average,” said Marcus Ohm, author of the report and partner at HLB Mann Judd Perth.

“Unusually, for recent years, there were a number of $1 billion+ cap companies listing during the year.

“The three largest IPOs of the year (Viva Energy Group, Coronado Global Resources Inc. and L1 Long Short Fund Limited) raised $4.75 billion between them – 64 per cent of the total funds raised.

“As well as being one of the few growth sectors for the year, the Materials sector recorded the most listings – with 35 listings representing 38 per cent of all IPOs undertaken – compared to 29 listings in 2017.”

Continuing the trend of the past few years, small cap companies – those with a market capitalisation of less than $100 million – continued to make up the bulk of new entrants to the IPO market, Mr Ohm said.

“There were 72 small cap IPOs undertaken during the year, down on the 88 of the previous year, but nevertheless representing 77 per cent of the total IPO market.

“The total also remains well above the previous five year average of 50 listings.”

Mr Ohm said some companies had difficulties raising capital during the year, and this is reflected in the total number of IPOs that did not meet their capital raising goals.

“Only 72 per cent of all new listings were able to meet their target, which was down on both the 2017 and 2016 years which saw 79 per cent and 83 per cent of targets met respectively.”

Mr Ohm added, on average, IPOs in 2018 experienced an underwhelming share price performance subsequent to listing.

“New markets entrants recorded an average first day share price gain of 5 per cent, but only 47 listings ended their first day above their listing price – a rather poor result given that the issue price of these IPOs was typically discounted.

“Year end gains were disappointing too, as on average, new IPOs for the year decreased in share price by 18 per cent by year end. This is a worse performance than other market indicators, with the ASX 200 recording a decrease of 7 per cent for the calendar year.”

The year end losses made by a significant number of IPOs in 2018 and general market conditions suggest that there is likely to be a reduction in IPO activity in the coming six months, Mr Ohm said.

“Unsurprisingly only 17 companies had applied to list on the ASX at the end of 2018, well down on the 37 that had applied at the same time in the previous year.

“The companies that have applied are hoping to raise $179 million, which is a 70 per cent reduction on the $603 million sought at the end of 2017.

“Materials stocks made up the majority of the proposed listings with seven listings, showing market sentiment still remains for this sector.

“Overall the pipeline appears to be soft and reflects the performance of IPOs and the wider market. This was evidenced in the final quarter of 2018 with sentiment perhaps being an important factor.

“Companies considering listing will need to clearly articulate their offerings and provide sound investor communication.”

HLB Mann Judd is an Australasian association of independent accounting firms and business and financial advisers, with offices in Australia, New Zealand and Fiji.

* Emerging, or small cap, companies are defined in this report as those with a market capitalisation of $100 million or less. All data excludes property trusts.