Australia is experiencing a dramatic shift in the investment landscape, as public listings have fallen from 2,219 to just 2,124, reflecting a global trend in which the appeal of public markets is rapidly diminishing.
According to ASX Group’s most recent activity report, the market operator has seen just 15 new listings in the 12 months to 30 September, while 46 entities have delisted from the exchange.
Martin Donnelly, managing director of client relations at EQT Capital Raising, noted that the shrinking number of public listings marks a larger shift in how companies choose to grow and access capital.
“For investors, this means they need to expand their horizons beyond traditional public markets and look at the opportunities in private markets, which are becoming a critical source of innovation and value creation,” Donnelly said.
“Private markets offer access to dynamic firms that may never go public, presenting growth potential that is often overlooked in today’s environment.”
According to EQT, rising costs and complexities of going public are some of the key considerations pushing companies to opt for the private capital route, coupled with stricter regulations, increased compliance requirements, and greater scrutiny from stakeholders making the public market less attractive.
As such, many companies now see private markets as a more flexible way to continue growing and innovating without the challenges of an IPO.
This comes as recent data from JPMorgan shows that the number of private companies in the US backed by private equity firms has surged from 1,900 to 11,200 over the last 20 years.
"Private markets have evolved into a vital part of modern investment strategies, not only for portfolio diversification but also as a driver of sustainable, long-term wealth creation,” Donnelly said.
“With fewer public companies to choose from, investors can no longer rely solely on public markets for growth. By tapping into private capital, they can gain access to innovative sectors and high-growth opportunities that offer more resilience and less exposure to market volatility.”
According to ASX, total new capital quoted in September was $6 billion, compared to $7.3 billion in the previous corresponding period (pcp).
Meanwhile, the total quoted market capitalisation of entities delisted was $500 million compared to $400 million in the pcp.
Across the pond, the number of publicly listed companies in the US has plummeted by nearly 50 per cent over the last 25 years, highlighting that ASX’s own contraction is not a singular trend.
Similarly, the London Stock Exchange has seen a reduction of more than 15 per cent in listings over the past decade, according to EQT.
A recent note from PrimaryMarkets pointed to smaller listed companies, in particular, having to bear the brunt of increasing cost of compliance, challenges in raising capital and a growing focus on short-term performance.
“Companies list on the stock exchange primarily to raise capital and provide liquidity for their shareholders. For larger companies, these goals are often met continuously, making staying listed a logical decision,” said Jamie Green, executive chairman of PrimaryMarkets.
“However, for smaller companies, the reality is often different. Capital can remain elusive even while listed and shares can become highly illiquid, trading sporadically. Faced with these challenges, many smaller firms conclude that the costs and compliance obligations of remaining listed are not an effective use of shareholders’ funds.”
According to Green, delisting also enhances a company’s operational flexibility.
“Publicly listed firms face intense scrutiny from investors and analysts, creating pressure to deliver short-term results, typically reflected in quarterly earnings. This focus can sometimes undermine long-term strategic plans.”
