Australia is experiencing a sea change in the investment landscape, as the number of public listings has fallen from 2,219 to just 2,124, reflecting a global trend where the attractiveness of public markets is rapidly diminishing.
According to the ASX Group’s most recent activity report, the market operator recorded just 15 new listings in the 12 months to September 30, while 46 entities were delisted from the exchange.
Martin Donnelly, managing director of client relations at EQT Capital Raising, noted that the decline in the number of public listings marks a larger shift in how companies choose to grow and access capital.
“For investors, this means broadening their horizons beyond traditional public markets and examining opportunities in private markets, which are becoming a critical source of innovation and value creation,” Donnelly said.
“Private markets provide access to dynamic companies that may never be publicly traded, with growth potential often overlooked in today’s environment. »
According to EQT, rising costs and complexity of going public are some of the key considerations driving companies to take the private capital route, coupled with stricter regulations, increased compliance requirements and a increased scrutiny from stakeholders making the public market less attractive.
As such, many companies now view private markets as a more flexible way to continue to grow and innovate without the challenges of an IPO.
This comes as recent data from JPMorgan shows the number of private companies in the United States backed by private equity firms has fallen from 1,900 to 11,200 over the past 20 years.
“Private markets have become an essential part of modern investment strategies, not only for portfolio diversification, but also as an engine for long-term sustainable wealth creation,” Donnelly said.
“With fewer public company choices, investors can no longer rely solely on the public markets for growth. By tapping private capital, they can access innovative sectors and high growth opportunities that offer more resilience and less exposure to market volatility.
According to the ASX, total new capital listed in September was $6 billion, compared to $7.3 billion in the previous corresponding period (pcp).
At the same time, the total market capitalization of the delisted entities was $500 million, compared to $400 million in the PCP.
Across the Atlantic, the number of companies listed on the US stock exchange has fallen by almost 50 per cent over the past 25 years, underscoring that the ASX-specific contraction is not not a single trend.
Similarly, the London Stock Exchange has seen a reduction of more than 15 percent in its listings over the past decade, according to EQT.
A recent note from PrimaryMarkets highlighted that smaller, publicly traded companies, in particular, are facing the brunt of rising compliance costs, difficulties in raising capital and an increasing emphasis on short-term performance.
“Companies are listed on stock exchanges primarily to raise capital and provide liquidity to their shareholders. For large companies, these goals are often met on an ongoing basis, making remaining publicly traded a logical decision,” said Jamie Green, Executive Chairman of PrimaryMarkets.
“However, for small businesses the reality is often different. Capital can remain elusive even when listed and shares can become very illiquid and trade sporadically. Faced with these challenges, many small businesses conclude that the costs and compliance obligations of remaining public are not an efficient use of shareholder funds.
According to Green, delisting also improves a company’s operational flexibility.
“Publicly traded companies face intense scrutiny from investors and analysts, which creates pressure to produce short-term results, typically reflected in quarterly earnings. This focus can sometimes undermine long-term strategic plans.
