‘Worrying picture’ as number of companies listed on the ASX shrinks to 2007 levels

The number of companies listed on the Australian stock exchange has fallen to 2007 levels, posing the question, why are so few companies choosing to go public?

That’s the question Morningstar market strategist Lochlan Halloway mulled over as he noted the local bourse currently hosted about 1900 entities, down about 12 per cent from a peak of 2158 in June 2022.

The observation comes as 2026 shapes up to be another fizzer for ASX initial public offerings, with only 17 stocks listing this year so far, many of them small miners, compared to a long-run average of 83.

“Then there are the departures: takeovers, take-privates, and a scattering of forced delistings for those who fell foul of the exchange’s rules,” Mr Halloway said on Friday.

“A thin trickle in, a steady stream out. For anyone who believes in public markets, this is a worrying picture.

“As the opportunity set shrinks, investors lose the ability to match cashflows and risk to their own needs, and more of corporate Australia sits beyond ordinary shareholders, available only to private equity, the institutions, and the members of big super.”

It may not be as grim as the head count appeared, he said, with ASX-listed acquirers absorbing more than 330 businesses from external markets since the June 2022 peak. There were almost 100 sold the other way and a couple of demergers.

“Counted as businesses rather than tickers, the exchange ends up only about 25 short of the peak,” Mr Halloway said.

“The usual fear behind a shrinking market is that private capital is draining the public one, buying up businesses and holding them out of reach. Some of that is real. But the traffic runs both ways.

“Listed companies are reaching into private markets too, buying businesses and carrying them onto the exchange without the ceremony of a float.

“That doesn’t mean there isn’t a cost to all of this. Take Greencross, the pet-care business that was listed on the ASX until 2019, when it was taken private by TPG Capital.

“TPG planned to float it again this year, only for Coles to emerge as a potential buyer. Once a standalone business, it could yet return to public markets inside another, much larger listed entity.

“What dies is the pure-play, the ability to hold that one exposure on its own.”

He said some of the reasons why so few companies were choosing to list could include “the myopia of public markets” or listing rules that some argued were too stringent.

“For the health of public markets, it’s worth figuring out.”