Australia doesn’t have a shortage of capital.
Nor does it lack ambitious founders, investors or growing businesses and startups.
Despite this, Australia’s IPO market has slowed drastically.
According to outgoing ASIC Chair Joe Longo, part of the problem is regulation.
He may be right.
Speaking this week, Longo described Australia’s corporate regulatory framework as “almost impenetrable”, pointing to the roughly 3,300-page Corporations Act as a growing barrier to innovation and capital formation.
When the chairman regulator of corporations itself begins to question if the system has become too complex, the conversation changes.
This isn’t just a complaint from founders frustrated by compliance costs or investment bankers lamenting a weak IPO pipeline.
It’s a question of whether structurally Australia’s public markets are still attractive enough to justify going public.
Going public is not and has never been simple.
IPOs are expensive.
Companies face legal, accounting, underwriting, governance, and compliance costs before they even ring the opening bell.
Once listed, scrutiny intensifies.
Quarterly expectations, continuous disclosure obligations, shareholder activism, remuneration oversight, governance constraints, and public market volatility all become part of daily reality.
For founders, going public often means sacrificing privacy, flexibility, and at times even control.
Regulation exists for good reason.
Investor protections, disclosure standards, and governance rules help maintain trust in capital markets.
But there is a legitimate question as to whether complexity has reached a point where protection begins to undermine participation.
Public Markets Are No Longer The Only Game In Town
Regulation is only 1 piece of the puzzle.
Even if Australia’s listing rules were dramatically simplified tomorrow, public markets would still face a structural challenge.
Companies have less of a reason and need to go public as early as they once did.
For much of recent history, listing on a public exchange was one of the few realistic ways for growing businesses to access substantial pools of capital.
Now that has changed.
Venture capital, growth equity, private credit, sovereign wealth funds, family offices, and private equity firms now offer businesses access to large pools of capital without the obligations of being publicly listed.
For founders, the appeal is obvious.
Private capital often allows companies to raise capital while maintaining greater control, avoiding quarterly earnings pressure, reducing disclosure obligations, and staying out of the public spotlight.
In this environment, the question isn’t just whether Australia’s IPO process is too burdensome and complex, it’s whether public markets are offering enough in return to justify the trade-off.
Tax Changes
The change to the capital gains tax discount previously at 50% now set to be changed indexation may also further discourage future IPOs as founders weigh the costs and benefits of selling their stake in a country with one of the highest CGT rates in the world.
Why This Matters
Investors Get Locked Out
A shrinking IPO market is not purely a problem for investment bankers, lawyers, or accountants.
It has broader consequences for capital markets, ordinary investors and super funds.
Public markets have historically played an important role in democratising and socialising wealth creation.
They allow retail investors, super funds, and institutions to participate in the growth of businesses as they scale.
But if the most attractive companies remain private for longer or avoid public markets entirely.
That opportunity now becomes increasingly concentrated among private equity firms, venture capital funds, institutional investors, and wealthy private capital.
Retail investors are left buying businesses later in their lifecycle, after much of the highest growth has already occurred.
Capital Outflow
Capital is mobile and is global.
It doesn’t remain where opportunity is weakest and fewest.
If the ASX offers fewer attractive growth opportunities, investors will increasingly look overseas for equity investments.
For institutions, super funds, and even retail investors through global investment products, oversea markets may offer deeper liquidity, stronger pipelines of growth companies, and more compelling opportunities.
This creates a negative feedback loop.
Fewer compelling domestic listings reduce investor interest, weaker investor participation makes Australian markets less attractive for future issuers, and capital increasingly flows offshore.
A Less Dynamic Market
Over time, this risks weakening Australia’s role as a destination for capital formation.
Fewer listings mean less diversity, less innovation, weaker price discovery, and a market increasingly dominated by mature and older names rather than emerging and growing businesses.
Put simply: if the best companies stay private, public investors are increasingly left buying maturity instead of growth.
The Balance Between Protection And Participation
None of this is to suggest regulation alone and itself is the problem.
Strong disclosure standards, governance requirements, and protecting shareholders are essential to maintaining public trust and confidence in capital markets.
Without them, public markets become vulnerable to poor governance, weak transparency, and ultimately, a loss of investor confidence.
The real question is whether Australia has struck the right balance of a regulatory framework that protects investors and a regulatory framework simple enough that it doesn’t discourages companies from participating.
If the cost of protection becomes too high, capital doesn’t disappear, it simply goes down another path.
Capital Goes Where It’s Wanted
Australia’s IPO problem is not simply about regulation.
Nor is it solely about market cycles.
It is about whether public markets remain competitive in a world where capital has increasinbly become more global, more mobile and has more options.
Joe Longo may be right to warn that complexity has become a barrier.
But even if regulation is streamlined, Australia’s public markets still face a broader structural challenge: convincing high-quality businesses that going public is worth the trade-off.
Capital markets exist to connect investors with opportunity.
If that connection becomes too costly, too cumbersome, or too unattractive, capital will simply find another route.
And increasingly, it already has.