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29 November 2023

When it comes to IPO, timing is not all that matters

By David Robertson









Most merchant bankers had assumed that the number of initial public offerings (IPOs) would have picked up by now but it is reflection of the weakness and fragility that still remains in global stock markets that there have been quite few flotations so far this year.

One of the few big listings was Rusal, the world's largest aluminium company, which floated about 10 per cent of its stock in Hong Kong. However, Rusal's decision to go to the market had little to do with picking an optimal time and everything to do with the need to pay down debt.

In London, New Look, a retailer, dropped its IPO plans recently. As did Merlin, which owns Madame Tussauds, and Travelport. However, one company's bad timing is another's prime opportunity and Barrick Gold, the world's largest gold producer, chose last week to announce that it would seek an IPO for its African assets.

By listing African Barrick Gold (ABG) in London, Barrick is hoping to take advantage of that buzz over gold. The listing could raise up to $3.7 billion and will put ABG straight into the FTSE 100.

However, this is not just a case of opportunism. ABG's assets are currently too peripheral to woo the management and financial resources within Barrick that will be necessary to increase their value. By spinning the division off, Barrick has freed the managers of these assets to focus on growth. ABG is a reminder that when it comes to seeking an IPO, timing is only one of the factors to be considered.









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