Upcoming ASX IPOs 2023 : Exciting Opportunities

ASX IPOs Introduction

Many small private companies, when planning to grow in the Australian market, generally consider an IPO and associated listing on the Australian Securities Exchange as a means to enhance growth, create new opportunities for the business, and provide a liquid market for its security. Furthermore, foreign companies may consider an ASX listing to access the Australian capital markets, and private equity investors use IPOs to exit their investments.

It is highly important for the promoters of the company to evaluate the advantages and disadvantages of a listing. Consider options for achieving the goals and understand the IPO process in advance, taking the important steps.

What is an IPO?

An initial public offering (IPO) is the process of selling securities to the public in the primary market. It is the largest source of funds with a long or indefinite maturity for the company.

An IPO is an important step in the growth of a business. It provides a company with access to funds through the public capital market. An IPO also increases the credibility and publicity that a business receives. In most cases, the IPO is the key reason to avail quick financial support and expand the company further. In terms of the economy, when a large number of IPOs are issued, it indicates a healthy stock market and the status of the economy.

When a company issues an IPO for the first time in public, it develops a close connection with the investors called shareholders of the company; thus, shareholders are also commonly known as the owners of the company. The shareholder of the company has the right to maintain their position in the secondary market whenever they wish to do so.

Types of IPOs

There are two types of IPOs, which are generally categorized as follows:

Fixed price offering: A fixed price is set for the initial sale of their shares, which generally refers to the issue price. The demand for the stocks can be known once the issue is closed. If the investors partake in the IPO process, then they must pay the full price of the shares when making the applications.

Book-building offering: In this particular method, the company initiates an IPO and offers a price band on the stocks to the investors. Interested investors bid on the shares before the final price is decided. The interested investors need to highlight the number of shares they will buy and the amount they are basically willing to pay. The lowest share is generally referred to as a floor price, and the highest stock price is known as the cap price. The ultimate decision for the shares is determined by the investors alone.

IPOs: Advantages and Disadvantages in Investment?

Investing in the initial public offerings has advantages as well as disadvantages. Let’s look at the advantages first.

Advantages of Investing in IPOs

Increased recognition: It helps in developing the reputation and increasing the credibility of the company management. Companies that are listed and traded in public draw more attention than normal, unlisted private market players.

Access to financial resources: A company may never receive more capital than it raises by going public. After significant support from cash availability, a company's growth can have a huge positive impact.

Diversification opportunity: When a company becomes public, its shares are traded on an exchange amongst investors, which increases investor diversity because no single investor owns a majority of the company’s outstanding shares; consequently, buying shares in a publicly listed company can help diversify investment portfolios.

Management discipline: It developed more responsibility for the company management to prioritize profitability over other objectives, such as growth or expansion. It also makes contact with the common shareholders easier because they cannot hide their issues.

Disadvantages of Investing in IPOs:

Costing: The IPO process involves a huge complex process as well as incurring hugely costs because of regulatory compliance for public firms. The IPO transaction process necessitates the investment of capital in an underwriter, an investment bank, and an advertiser to ensure that everything should go well.

What are the Best Upcoming IPOs to Watch?

The economic uncertainty has led many companies to adopt ‘await and watch’ policy. However, more activity related to IPOs are forecasted during 2023.

Upcoming Australian IPOs

Let’s take a look at companies that are mulling a listing on the Australian Securities Exchange.

Midwest Lithium Limited (ASX: MWL)
Industry: Lithium
Expected closing date: 29 September 2023.
Expected listing date: 25 October 2023.

Midwest Lithium Limited (ASX: MWL) holds a 100% interest in a past-producing hard rock lithium jurisdiction worldwide, situated in the heart of the US. 

The company hosts the largest spodumene crystals; the area provides an opportunity to access identified spodumene mineralized outcrops in a well-established and mining-friendly jurisdiction.

The Black Hills of South Dakota benefit from established local infrastructure, extensive existing geological knowledge, historical drilling, and past production records showing spodumene concentrate being produced for decades in the region using conventional methods.

Golden Globe Resources Limited (ASX: GGR)
Industry: Gold
Expected closing date: 9 October 2023.
Expected listing date: 20 October 2023.

Golden Globe Resources Limited (ASX: GGR) is a gold exploration company with access to compelling resource targets in Queensland and Western Australia.

Over the past four years, the company has acquired four specific projects with high prospective, namely Dooloo Creek and Alma in Queensland, Crossways in Western Australia, and Neila Creek in NSW.

All projects present large gold resource opportunities, including high-grade copper. The company has conducted an extensive drilling and sampling process earlier at Dooloo Creek, achieving strong positive results, and further drilling is under planned, with an immediate focus on Neila Creek and continuation at Dooloo Creek.

Upcoming Australian IPOs

Frequently Asked Questions F.A.Q

What are the risks of trading or investing in an IPO?

Investing in IPOs carries risks such as price volatility and limited historical data, making it important for investors to carefully evaluate the potential rewards and uncertainties before making investment decisions.

What are the disadvantages of an IPO?

The IPO process involves a lot of time consumption and incurs heavy expenses because of regulatory compliance for public firms. The IPO transaction process necessitates the investment of capital in an underwriter, an investment bank, and an advertiser to ensure that everything should go well.

What happens when an IPO fails?

When an IPO fails, management becomes more alert and starts to rework their business models, target sets, and processes before coming to the investor's offerings.

How soon can you buy and sell IPO shares?

An investor can sell IPO shares on the day of listing. A retail share who would have received the IPO shares allotment may sell on or after the listing date.