Lure of private markets sees companies dodge, delist from ASX

New data from the Australian Securities Exchange (ASX) Group Monthly Activity Report for the last financial year has suggested the lure of private markets has finally won over investors, with delistings outnumbering new exchange entrants.

The report for June 2024 covering the 2023-2024 financial year found that compared to the previous financial year the number of companies listed on the ASX fell by four per cent from 2,255 to 2,155; 156 companies delisted from the exchange, which was 37 more than the previous period; and there were only 56 new listings, one less than the 2022-23 financial year.

Martin Donnelly, Managing Director of Client Relations at EQT Capital Raising, said while this is not a new trend, it has “accelerated” in recent years as investors search for new strategies to achieve portfolio diversification and stronger returns.

“Investors are increasingly pivoting towards private markets as they seek both diversification within their portfolios and higher returns. With more companies going private, the opportunity set for investors is continuing to increase, providing opportunities across a broad range of sectors including infrastructure and healthcare,” he said.

“We are seeing a marked shift in capital flows towards private markets across the globe. This is driven by a combination of higher returns,
portfolio diversification, and the flexibility that private markets offer to companies.

“For example, in the US the number of listings has dropped from just over 8,000 in 1996 to around 4,000 today, with valuations now concentrated in the mega-cap space. As a result, global exchanges are witnessing a decline in listed entities, mirroring the trends seen in Australia.”

Donnelly said a combination of factors, such as rise in high-net-worth individuals (HNWIs), the intergenerational wealth transfer and a company preference for private, have contributed to the phenomenon.

“[Our open-ended fund launched in September last year], EQT Nexus has been successful in Australia and internationally, as wholesale investors continue increasing their exposure to private assets,” he said.

“In May 2024, we saw the EQT Private Capital Asia Mid-Market Growth fund – which invests in Australia – close at more than double its target size, showcasing the heightened investor demand in private markets.”