Scrutiny, costs major hurdles to boosting IPOs

Increased scrutiny and costs are just some of the challenges facing listed companies and forcing private companies to stay private for longer.

According to Australasian Investor Relations Association chief executive Ian Matheson, there are four main factors that have companies either reluctant to go public or second-guessing whether they stay listed.

The first, he said while appearing at the Stockbrokers and Investment Advisers Association's (SIAA) 2025 conference, is the "markets' incessant expectations on listed companies to deliver short-term performance."

"I can understand that because clients are ultimately demanding returns, both performance and dividends. With an ageing population, right now the super fund pension bill is circa $50 billion per year; by the end of 2030 that'll have increased to $120 billion a year," he cited.

"Superannuants, on an annual basis, are going to be demanding more and more from their investments, including listed entities and companies need to feed that. That's a constant demand, so the expectations of investors and analysts only continues to grow."

The second factor, and also growing, are the regulatory, social and government expectations of listed entities.

"The constant scrutiny that companies are under during result seasons, during AGM seasons, you see this all the time - the media coverage of those events is, in many cases, quite disproportionate to the issues and some of the companies involved," he said.

Matheson's third and final point was around changes in market structure, saying the increase in disintermediation in markets and rise of exchange-traded funds and separately managed accounts may prove efficient for the wealth management industry and its clients - but it's less positive for listed companies.

This is because those investors typically are not on a company's share register, so it makes many companies' registers more opaque.

"That may not be a bad thing, but when you have investors who want to participate in a share purchase plan, for example, or they think they're a shareholder in a company they're invested in but have received no communication from those companies directly... it can lead to howls from many of those shareholders who think companies are dudding them or don't want to communicate with them," he explained.

"In reality, it's actually just the vehicle through which they've invested means they may have ended up in a custody structure where they don't get the full ownership experience."

Finally, Matheson said the ongoing costs associated with being listed are a significant barrier.

The association conducted a study about 18 months ago looking at its own membership, being listed companies, and found the median ongoing cost of being listed was $7.2 million a year. On top of this, mandatory climate reporting has now added about $1.2 million, as estimated by Treasury.

"Those ongoing costs of being listed, while some of them are not unique to being a listed entity, they are nonetheless a reflection of this ongoing greater expectation of listed entities by society, regulators, government and media, and demands on them," he said.