The early success of the QR IPO may have been a political lifeline for the beleaguered Queensland State Government, but there was also another group with more than a casual interest in the progress of Australia's largest float since Telstra. Equity markets lawyers have been tracking the patchy Australian IPO market and reading the tea leaves on what 2011 has in store - and they are encouraged by what they have seen with QR. The optimism is highlighted by speculation that private equity-owned Nine Entertainment is planning an A$5bn float in the first half of 2011.

But with optimism inevitably comes caution. "I think we'll see a reasonably steady stream of IPOs - but I don't think we'll see a huge rush," said Mallesons partner Shannon Finch. "But at the same time I don't think it will be the drought of IPOs that 2009 was. I'm expecting it to be a good year; investors will take some encouragement from QR but I don't think anyone is going to lose their head and pile into IPOs."

Finch says the dual-track process is likely to come to the fore in 2011: "At the end of the day, it will probably come down to the assessment of value and where sponsors are likely to get the best value and I suspect it will be a close run thing with trade sales," she said. "So we're anticipating that more people will consider the dual track path next year, which does raise some challenges for getting an IPO away. Having a trade sale there adds a certain amount of competitive tension to a point and then it can actually remove some of that momentum from an IPO as you get close to launch date."

Mid-market activity

It remains to be seen whether the QR float will stimulate IPO activity in the mid-market. Cooper Grace Ward managing partner Chris Ward says that comparing the two is rather like comparing "an elephant with an ant", but he believes that there is a connection. "The QR float did create in Queensland a huge amount of activity and publicity - it seems that it was probably a catalyst for people to think they might be able to get something away here.  I think there's a bit more appetite for that now," he said.  Ward says that the business community "held its breath" during the QR float and a different result with that IPO may well have had quite a different impact on equity markets activity.

Resource-driven Queensland and Western Australia remain the focal point for a good deal of IPO activity. McCullough Robertson is concluding the year with three IPOs this month and chairman Brett Heading says there are a "number of potential jobs" in the pipeline.  "The equity capital markets are opening up - there's no question about that for companies that have got decent boards, good prospects, reasonable track record and sensibly priced - they're going to get away, whereas if you'd asked me [last] January, it would have been different," he said. Bruce Humphrys of HopgoodGanim has a similar observation to make: "The guys here are doing a lot of mid-cap IPOs," he said. "The companies that have a strong mining presence are obviously able to attract capital from the public."

But again, optimism is qualified by caution. Paul Venus of Holding Redlich says that he is unable to draw any conclusions from the success of the QR float: "QR was always going to be successful," he said. "It was a great set of assets, a growth story, well run, not a high risk investment - so it doesn't come as a great surprise. I suspect the real IPO activity will be more than six months away, close to the end of 2011."