ASX de-listings outpacing new entrants

More than 60 companies have been delisted from the Australian Securities Exchange (ASX) so far this year, with only 13 new listings confirmed for 2024, new data from trading platform PrimaryMarkets reveals.

Of the 65 companies that have delisted, 54 requested removal while the remaining 11 were removed by the Exchange.

By contrast, only 13 new listings occurred in the first half of 2024, a slight decrease from the same period last year.

PrimaryMarkets attributed the listings imbalance to growing compliance costs, capital raising challenges, and the growing focus on short-term performance.

Among the most recent delistings include SaaS developer Ansarada Group (on 9 September), China-specialist distributor eCargo (6 September), and therapeutic cannabis distributor AusCann Group (29 August).

AusCann Group, among several others, were delisted after failing to pay their ASX listing fees. Meanwhile eCargo was voluntarily delisted, among a number of reasons, due to its low share price and deficient liquidity, while Ansarada accepted a buy-out by US-based SaaS developer DS Answer.

Earlier this year, BWX Limited entered voluntary administration in April 2023 due to financial distress, leading to its removal from the ASX. Similarly, Byron Energy (BYE) voluntarily delisted in May 2024 as part of a strategic shift.

Jamie Green, executive chair of PrimaryMarkets, underscored the challenges facing smaller companies that list on the ASX.

For these companies, he said, “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.”

However, companies often opt to delist for strategic purposes. “Delisting… 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.

He added that delisting also enables companies “to pursue long-term objectives without the distraction of market sentiment or the obligation to satisfy a broad range of stakeholders”.

Green concluded: “Companies must carefully weigh the strategic advantages of delisting – such as greater flexibility and control – against the potential disadvantages before making this decision.”