Australia exchange operator proposes IPO reforms to revive listings

(Reuters) -The Australian Securities Exchange (ASX) on Thursday unveiled a series of proposed reforms aimed at enhancing the global appeal of Australia's capital markets and revitalising its subdued initial public offering landscape.

In a detailed response to the Australian Securities and Investments Commission (ASIC), the exchange operator said it would focus on streamlining the IPO process, broadening investor access, and improving listing flexibility to make the Australian market more competitive internationally.

ASX has been under pressure from the corporate regulator to take a more proactive role in facilitating quicker, more efficient listings amid a prolonged slump in IPO activity.

The number of listed companies on ASX has fallen in recent years, a trend the exchange operator described as largely cyclical rather than structural.

Under the streamlining of the IPO process, the exchange operator proposes that ASIC undertakes not to extend the exposure period beyond seven days for new listings and allow retail investor applications to be processed during the exposure period.

Australia's process for IPOs has been criticised by some investment bankers and fund managers, especially for the length of time that a company's prospectus is reviewed by regulators ahead of a deal's launch. 

The move mirrors efforts in other regional markets such as Hong Kong and Singapore, which have begun reviewing their own IPO frameworks to regain lost ground amid global financial market volatility.

The bourse operator also asked to reduce the required minimum level of "free float" for new listings coupled with a more efficient and accessible corporate bond market.

The changes in the bond market would improve flexibility for issuers and increase access for retail investors.

"The opportunities outlined in our submission are designed to enhance the attractiveness of our listed markets to help them remain competitive with global peers and private capital, as well as provide retail investors with more wealth creation opportunities," said James Posnett, general manager of listings at ASX.

Initial public offerings raised $2 billion in 2024, LSEG data showed, of which $1.3 billion was raised by a single company - data centre trust Digico.

Dealmakers have pointed to volatile global conditions, a rise in private capital transactions, and rigid IPO regulations as key factors behind the slowdown.

An ASIC spokesperson said the commission had received almost 70 submissions from a cross-section of stakeholders including industry bodies, market operators, superannuation trustees, fund managers, law firms and individuals.

"We are currently reviewing the feedback and intend to make non-confidential submissions available in the coming weeks," the spokesperson said in an email to Reuters.

(Reporting by Kumar Tanishk and Rishav Chatterjee in Bengaluru; Editing by Stephen Coates)