Tech and telcos dominate Australian IPOs

Listing activity in Australia’s technology and telecommunications sector last year hit its highest levels in at least five years, according to Deloitte Australia’s latest IPO report.

The report found the sector accounted for the vast majority of all IPOs carried out on the Australian Stock Exchange in 2015 by both volume and market capitalisation, at 30 percent and 37 percent respectively.

Those figure were markedly higher than in 2014 when new tech and telecommunications stocks accounted for 19 percent of IPOs and 8 percent by market capitalisation ($6.5 billion in total), trailing behind the health and financial services sectors.

Deloitte said the sector’s IPO performance provided “convincing evidence that the country is shedding its image as a resource-dependent market”.

The business consulting giant argued that Australian technology companies like Atlassian which might once have had their sites firmly trained on the NASDAQ were becoming more open to listing on the ASX.

“With the volume of 'super money' in the system here, there is an increasing openness to doing so in Australia – this is compounded by evidence that a NASDAQ listed company quickly and inevitably 'loses its roots' (i.e. becomes very much a US company in its leadership, culture and general modus operandi)," the report stated.

"In response, some founders are seeing this as a form of 'giving back', following in the footsteps of Seek, Ozforex and Carsales, to create local icons and spur on other budding Australian entrepreneurs."

Deloitte also pointed to the federal government’s elevated focus on innovation since switching leaders late last year.

The report specifically highlighted Prime Minister Malcolm Turnbull’s announcement last December that the government would spend $1.1 billion over four years to fund an ‘ideas boom’.

Deloitte said Atlassian’s listing on the NASDAQ and $4.4 billion valuation had helped assuage fears of a “tech wreck 2.0”.

“There is obvious scope 
for further IPOs from a growing list of Australian start-ups, many of which have sought late-stage funding recently," the report stated.

"The likes of WiseTech Global, Envato, Campaign Manager, Hotels Combined, Canva and ROKT have been often talked about as future potential 'unicorns' (companies expected to be valued at above US$1bn) by venture capitalists."

The report’s release coincided with the first-ever meeting of a cabinet level federal government innovation and science committee on Tuesday night.

The federal government is also engaged in a range of committee activities aimed at improving tax conditions for start-ups and expanding their funding options.