Higher interest rates have deterred small-cap companies from joining the exchange but uncertainty around when rates will start falling is starting to clear up, according to HLB Mann Judd corporate advisory partner Marcus Ohm. “When interest rates are higher, valuations come down. And for some companies, that means valuations are not that attractive,” he said.

Companies are also going elsewhere for funding: cashed-up private equity investors seem more appealing than dealing with the hassle of continuous disclosure obligations associated with being a listed company, Ohm said.

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The rising number of corporate takeovers has also resulted in companies such as United Malt Group and software company Altium delisting from the bourse after being acquired by foreign giants. Meanwhile, sagging commodity prices, particularly in lithium and rare earths, have meant the timing hasn’t been right for some junior mining companies.

Ohm said he thought the number of floats could increase within a few months, with the fourth quarter of the calendar year typically seeing more IPO activity and a higher likelihood of interest rate cuts driving a more positive outlook. “Macro factors really drive sentiment. It’s critical in the IPO market,” he said.

“As far as the ASX goes, we’ve basically got one of the better exchanges in the world … we’ve actually got very high standards in terms of the types of companies we’ll let list on the ASX.”

Stock exchange operator ASX Limited is being hauled to the Federal Court by corporate regulator ASIC for allegedly misleading the market about the progress of its CHESS project, which was delayed five times before being ultimately killed off.

Investment manager Roger Montgomery believes there are structural problems that the ASX could fix that would make it more attractive for companies to float.

“If there’s an IPO, [investors] have got to commit to money early and commit to funding an IPO or committing to buy shares. But it could be three months before the thing lists – what happens in the intervening period? It’s a massive risk, so we’ve got to shorten that time between fund managers committing and the company listing.”

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