[SYDNEY] Australia’s securities regulator said on Tuesday (Jun 10) it would trial changes to speed up initial public offerings that are at a decade low by implementing recommendations from earlier reviews and allowing faster access for retail investors.
The Australian Securities and Investments Commission (ASIC) said the changes could shave as much as one week off the typical 20-week IPO process and reduce deal execution risk.
The trial will begin on Tuesday and last for two years, the regulator said.
“Creating a more streamlined IPO process underscores our commitment to ensuring our public markets remain attractive to companies and investors,” ASIC chairman Joe Longo said in a statement.
Longo said the funds raised through IPOs were at the lowest level in more than a decade, with only A$4.2 billion (S$3.52 billion) raised last year compared with A$22.9 billion in 2014.
ASIC’s new measures come just days after Virgin Australia launched a closely watched A$685 million IPO that attracted strong investor demand.
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Lizzie Lu, a partner at law firm Baker McKenzie, said the IPO slowdown was not primarily due to regulatory constraints.
“The structural headwind remains the abundance of private capital,” she said. “While this trial won’t reverse the decade-low listings trend overnight, it does reflect ASIC’s willingness to evolve – an important signal for long-term market competitiveness. The real test will be whether issuers see these efficiencies as sufficient to offset broader macroeconomic uncertainty.”
ASIC said the changes applied to companies seeking to list on the Australian Securities Exchange (ASX) through “fast-track” status, with a projected market capitalisation above A$100 million and no ASX-imposed escrow.
Most Australian IPOs are carried out through a front-end book-building process, which means the price is set and investor bids are taken ahead of the prospectus being reviewed and approved by Australian regulators.
ASIC and the ASX have been under pressure to speed up the IPO vetting process, to reduce the time investors are exposed to market fluctuations while a prospectus is under review.
Under the planned changes, companies would be able to submit a confidential prospectus or product disclosure statement at least 14 days before formal lodgement for ASIC review.
“Essentially pre-vetting prospectus’ and doing away with the exposure period will reduce the period an investor is on risk from the date it commits to participate in a front-end IPO bookbuild to the date the securities start trading,” said Patricia Paton, a partner at law firm Ashurst.
“The shorter the risk period, the easier it is for investors to make the decision to support a new listing.”
ASIC said it would also adopt a “no action” position allowing eligible companies to begin accepting retail investor applications during the standard seven-day exposure period.
Typically, retail investor orders are taken after the prospectus becomes public following the regulator’s reviews.
The trial was also a part of a broader review of regulatory settings around IPOs, ASIC said.
“While we do not see regulatory settings as the silver bullet, we have received lots of ideas and are considering further regulatory adjustments to support a strong and well-functioning market,” Longo said. REUTERS
