One way of floating your investment boat in 2017 could be to get onto an Initial Public Offering (IPO) on the Australian sharemarket.
IPOs can either surge or tank, of course, but many an investor has done well out of buying shares prior to a stockmarket listing.
Because of their pricing and demand, many IPO shares increase significantly on debut, presenting investors with an opportunity for immediate profit taking.
A common strategy is to sell some and take a profit, and hang on to the rest for a longer ride.
Think of them as buying a unit off the plan, as opposed to an existing house or apartment.
For 2017, investors will have to be very targeted in their choices.
The ASX is introducing more stringent listing requirements which could limit the number of floats, and private equity firms – who bring companies to an IPO as part of their exit strategies – are widely reported to be in acquisition, rather than divestment, mode.
In 2016, research house Dealogic says the value of Australian IPOs was US$4.3 billion, down from US$5.8 billion in 2015, so there are increasingly slender pickings.
Even so, here are some upcoming names to look out for:
• NewCo. This is a spin off from major energy company Origin, which is selling off its conventional oil and gas operations into a separate company. Analysts estimate the float will be valued at around $1.6 billion. The timing of the float is yet to be announced.
• Quadrant Energy. This is a WA gas producer currently owned by Brookfield Asset Management and Macquarie Capital. They bought the business in 2015 for US$2.1 billion, and have made no secret of the fact that a float is their end game.
• MSL Solutions. MSL is a sports club software company which owns UK hospitality software provider Verteda, and golf tournament software firm Golf Box. Based in Queensland, and with contracts with major sports venues such as ANZ Stadium, the company said it is looking for more acquisitions and plans to go public with an ASX listing in the first half of 2017.
• Lithium Consolidated Mineral Exploration. Lithium is in high demand as a component for the expanding battery industry. The company is based in Australia, with assets in SA and WA, but also has assets in the US and China. The IPO will look to raise around $9 million to help fund expansion.
IPOs, of course, can go down as well as up, so caution is needed.
Australians eat a lot of chicken, and you might think that an investment in Ingham’s, Australia’s largest poultry producer, would be a surefire winner.
However, the shares were issued at $3.15 late last year and fell as low as $3.10 before recovering slightly to $3.20.
Today, in early January, they are trading at $3.21. Not a great result, but analysts forecast they will nudge up close to $4 by the end of year – worth hanging onto for the longer haul if that is the case.