HONG KONG/SYDNEY Bankers in Australia have much to cheer this Christmas as fees from underwriting IPOs surge 10-fold this year, and many are now betting on an equally active year in 2014 as a slew of private equity exits keep the market busy.
Before the year ends, 14 more companies are due to start trading on the bourse after raising almost $1 billion in total. That would take the 2013 tally to about $6 billion, a six-fold jump from last year and the highest since 2010, according to Thomson Reuters data.
The rush of listings, most of which are concentrated in the last two months of the year, have led some bankers to predict an initial public offering pipeline of at least A$6 billion ($5.46 billion) next year, defying a slowing domestic economy weakened by falling commodity prices.
The resurgence follows two lean years in 2011 and 2012 when investor appetite for new issues slumped due to global economic uncertainty and a rash of poor secondary market performances.
"In Australia, we've been through a series of interest rate cuts... and that combination of historically low rates plus confidence around the global growth picture as well as lower volatility has attracted a lot of investors back into equities," said Hugh Falcon, co-head of equity capital markets for Australia and New Zealand at Macquarie Group Ltd (MQG.AX).
The Australian IPO market has been the third-busiest in the Asia-Pacific region - behind Hong Kong and Singapore - rising from the 10th place in 2012, Thomson Reuters data shows.
The estimated fees from underwriting IPOs in Australia has jumped to $110 million this year, according to Thomson Reuters/Freeman Consulting, with home-grown Macquarie dominating the league table followed by Swiss bank UBS AG UBSN.VX.
"The challenging environment of the last four or five years meant the IPO windows that have occurred were very short. This has meant we have witnessed a lot of pent-up demand from issuers to go to market in recent months," Falcon said.
For investors, buying into new listings has been more profitable than betting on already listed companies, further emboldening issuers.
Companies such as OzForex Group (OFX.AX), Veda Group (VED.AX) and Steadfast Group (SDF.AX) have risen more than 40 percent from their offer prices. That compares with a 11.6 percent gain in the benchmark .AXJO index this year.
Packaging company Pact Group (IPO-PGP.AX) is due to list on December 17 after raising A$649 million in Australia's biggest IPO this year. The second-largest was Nine Entertainment Co Holdings Ltd (NEC.AX), which made its market debut on Friday.
Travel insurer Cover-More Group, seeking to raise A$521 million, plans to start trading two days after Pact.
On Monday, education training provider Vocation Ltd IPO-VET.AX will make its debut after raising A$253 million by selling shares at A$1.89 each.
There are some concerns the Federal Reserve will call an end to easy money in the United States, and worries about the outlook for the Australian economy.
The Reserve Bank of Australia predicts growth will stay subpar at around 2.5 percent through 2014 before hopefully picking up in 2015 as exports and domestic demand help offset a cooling mining boom.
Among the companies expected to list next year include government-owned insurer Medibank Private and healthcare business The Healthscope Group, owned by private equity funds The Carlyle Group (CG.O) and TPG Capital Management, according to a banking source.
Facilities management outfit Spotless Group, owned by Australian private equity fund Pacific Equity Partners, is also expected to launch an IPO, the source said, adding those offers could potentially raise more than A$1 billion each.
The long-delayed $3 billion IPO of Hong Kong utility CLP Holdings Ltd's (0002.HK) Australian unit TRUEnergy is another possible deal, bankers say.
"Next year there is potential for a lot more floats and a lot bigger floats, and I think the deal size is the key point of difference," said Sean Walsh, head of equity capital markets for Goldman Sachs in Australia. ($1 = 1.0991 Australian dollars)
(Additional reporting by Jane Wardell in SYDNEY; Editing by Denny Thomas and Ryan Woo)