Eight Trends Shaping Equity Capital Markets in 2026(II)
2026-10-28
Eight Trends Shaping Equity Capital Markets in 2026
5. Secondary Capital Raisings Remain World Leading
What’s happening?
ASX-listed companies raised $37.8 billion in follow-on capital during FY26, up 20% on FY25. The ASX has ranked first globally by volume of follow-on transactions in nine of the past ten financial years.
This strength is underpinned by a facilitative regulatory regime. Under ASX Listing Rule 7.1, companies can raise up to 15% of their issued capital through placements using streamlined documentation. Smaller companies (those outside the S&P/ASX 300 with a market capitalisation of $300 million or less) can seek shareholder approval for an additional 10% placement capacity under Listing Rule 7.1A, bringing total annual new issue capacity to an amount equal to 25% of their existing shares.
What are some examples?
In 2025, the combined placement and share purchase plan (SPP) remained an important structure for larger transactions, with the Goodman Group’s $4 billion placement and SPP to fund data centre expansion being the single largest follow-on raise of the year. For transactions above $50 million, standalone placements accounted for 45% of deals in 2025, followed by combined placement and SPP structures (36%).
ASX data shows continued reliance on placement structures with many of these being executed on a non-underwritten basis, suggesting reduced reliance on traditional underwriting in parts of the market.
What’s next?
Australia’s secondary raising settings are expected to continue to attract companies to the ASX. As noted in the ASX’s own submission to ASIC’s evolving capital markets discussion paper, the combination of regulatory settings that allow companies to raise up to 15% of issued capital with concise documentation “works well to facilitate secondary capital raisings” and reinforces the case for similarly streamlining the IPO process.
However, the speed of placements under Listing Rules 7.1 and 7.1A relies on the “low-doc” regime. Listed companies are permitted to use a transaction-specific prospectus under section 713 of the Corporations Act because the market is deemed to already be informed through continuous disclosure. ASIC can deny access to this concession if the entity has contravened its continuous disclosure obligations in the previous 12 months. In an environment where ASIC is actively testing the boundaries of continuous disclosure, companies contemplating secondary raisings need to ensure their disclosure house is in order, before relying on the streamlined placement framework.
6. Market Drivers Change from Active Management to Passive Funds, Superannuation and Computer-Driven Trading
Three forces are reshaping Australia’s equity markets: the rise of passive investing, the growing dominance of superannuation funds and the proliferation of algorithmic trading.
Australia’s ETF market reached a record $324 billion in assets under management in 2025, up 43% year-on-year, with State Street forecasting net inflows to exceed $40 billion in 2026. Passive funds now account for a significant share of market activity, and research from Lonsec has highlighted that passive investing is reshaping index composition and liquidity on the ASX.
At the same time, Australia’s superannuation system – now exceeding $4.5 trillion in total assets, or approximately 150% of GDP – collectively owns around a third of the ASX. Super funds have become the dominant institutional participants in Australia’s equity markets, with their investment decisions exerting an outsized influence on market direction and capital flows.
A key structural driver of the shift towards passive investing is Australia’s superannuation performance-testing regime. Under the Your Future, Your Super (YFYS) reforms, now embedded in the Superannuation Industry (Supervision) Act 1993 (Cth), APRA conducts an annual performance test for MySuper and trustee-directed products. The consequences of failure are severe: the trustee must notify affected members within 28 days, and a product that fails for two consecutive years is closed to new members until it passes a future test.
The design of the test creates a powerful incentive for superannuation funds to track benchmark indices closely rather than pursue differentiated active strategies. Treasury’s own review of the YFYS measures acknowledged that the test “can unintentionally affect investment decisions of all funds” by “encouraging short-termism and benchmark hugging as well as discouraging certain investments”. Industry bodies including ASFA and the Conexus Institute have confirmed this dynamic, with the latter characterising the possibility of test failure as an “existential threat” for super funds.
In addition, ASIC estimates that up to 85% of trading on the ASX is now algorithmic, reflecting the dominance of computer-driven strategies across trading desks. This shift has implications for the market, including the speed of price discovery and liquidity available during periods of volatility.
What are some examples?
The influence of passive investing is illustrated by the concentration of returns in the ASX. In FY25, Commonwealth Bank shares accounted for approximately 33% of the ASX 300 index’s total 13.7% return, making it extremely difficult for active managers who were underweight the stock to outperform the benchmark.
For super funds subject to the YFYS performance test, this dynamic is particularly acute: underweighting a dominant stock like CBA is an active decision that directly increases tracking error against the benchmark, yet maintaining benchmark weight means amplifying the very concentration risk that the fund’s members may wish to avoid.
What’s next?
With AI empowered trading strategies expected to increase in volume we expect computer driven trading to increase and result in further changes to market composition.
in addition, the tension between passive and active investment strategies is likely to intensify as market concentration continues to grow. In May 2026, Treasury released a consultation paper on strengthening the superannuation performance test, acknowledging that “aspects of the current design may be discouraging investment in some sectors that could deliver strong, long-term returns”. The direction of reform suggests a recognition that the current benchmarks may need to evolve if Australia’s largest pool of investable capital is to be deployed in ways that support both member outcomes and broader economic productivity.
For issuers, the implications are nuanced. Passive funds - which now represent a substantial and growing share of market capitalisation - do not typically participate in IPOs, placements or other primary capital raisings. The practical consequence is that the pool of capital available for primary raisings is increasingly concentrated among active fund managers and, critically, the internally managed investment teams of Australia’s major superannuation funds, many of which deploy capital across both active and passive strategies.
7. Private Capital Sees Growth and Regulatory Scrutiny
What’s happening?
Private capital is competing with - and in some cases displacing - public markets as the preferred avenue for capital raising. Australia’s private credit market has expanded markedly, with the market now estimated to be worth around $200 billion.
ASIC has responded to this growth with a significant increase in regulatory attention. In 2025, ASIC published Report 814 (Private Credit in Australia), Report 820 (Private Credit Surveillance: Retail and Wholesale Surveillance) and Report 823 (Advancing Australia’s Evolving Capital Markets), each highlighting the need for stronger governance, disclosure and conflicts management in private markets. ASIC’s 2026 enforcement priorities include “poor private credit practices” as a focus area.
What are some examples?
The influence of private capital is visible in both deal activity and market dynamics. Superannuation funds are increasingly investing directly in private markets, with analysis by Frontier Investors for the Super Members Council showing that approximately 16.5% of APRA-regulated super fund assets are now allocated to unlisted asset classes. This trend is intensifying competition for quality assets and reshaping deal structures, as super funds pursue direct acquisitions and co-investment strategies.
What’s next?
Private capital is expected to continue growing, but the regulatory environment is tightening. In 2026, ASIC issued a catalogue of key legal obligations for private credit fund operators, and indicated it will refresh its regulatory guidance in 2026–27 to reflect private credit surveillance findings. As ASIC has emphasised, private credit “done well” complements the banking system and benefits both investors and borrowers, but poorer practices risk undermining confidence in the sector.
8. ASIC Enforcement Shows a Sharper Regulatory Edge
What’s happening?
Across multiple fronts, ASIC’s enforcement posture has sharpened materially over the past twelve months. In the 2025–26 financial year, ASIC secured a record $830 million in civil penalties – more than double the prior year – and returned $644 million to affected Australians. This reflects a system-wide intensification of enforcement activity spanning market infrastructure, continuous disclosure, insider trading, private credit and ESG-related conduct.
Several strands of this trend are particularly significant for the ECM landscape. First, ASIC has created a dedicated specialist insider trading team that has already delivered its first conviction and has signalled multiple further criminal referrals in 2026.
Second, continuous disclosure – the bedrock obligation for listed companies – has become an actively contested frontier. In April 2026, the Federal Court ordered Electro Optic Systems Holdings to pay a $4 million penalty for failing to disclose a material revenue downgrade for approximately 14 weeks. In the same month, however, the Court dismissed ASIC’s high-profile case against Nuix, finding no contravention of its continuous disclosure obligations in relation to post-IPO financial forecasts. ASIC has appealed the Nuix decision.
The McPherson’s decision, handed down in August 2026, reinforces this trend. The Federal Court found that the health and beauty company breached its continuous disclosure obligations and engaged in misleading or deceptive conduct by failing to update the market about declining sales forecasts for its Dr LeWinn’s skincare line following a disappointing sales event in China. ASIC Chair Sarah Court commented that “listed entities must act promptly when information emerges that materially alters previously disclosed earnings guidance”.
Taken together, these cases illustrate that ASIC is pressing the boundaries of what continuous disclosure requires – particularly in the context of earnings guidance and IPO forecasts – while the courts are drawing careful limits.
Third, ASIC has demonstrated a willingness to hold market gatekeepers – not just listed companies – to account. The $23.3 million penalty imposed on the ASX itself for misleading the market about the progress of its CHESS replacement project was a landmark outcome, with the Court finding that the ASX’s most senior decision makers were directly involved in the misleading announcements.
What are some examples?
Beyond the cases already noted, the trend is visible across the broader enforcement portfolio. ASIC secured a record $300 million penalty against Union Standard International Group for CFD misconduct, a $35 million penalty against HSBC for scam protection failures, and a $35 million penalty against Macquarie Securities for misleading short sale reporting over a 14-year period.
In private credit – a named enforcement priority for the first time in 2026 – ASIC has completed surveillance of 28 funds and identified poorer practices in disclosure, fee transparency, conflicts management and valuations. In the ESG space, ASIC secured penalties of $7.3 million against Fiducian Investment Management and further orders against Active Super for greenwashing.
The breadth of these actions – spanning market operators, banks, fund managers, listed companies and their directors – demonstrates that this is a systemic enforcement uplift.
What’s next?
ASIC’s 2026 enforcement priorities confirm that this trajectory will continue. Named priorities include poor private credit practices, financial reporting misconduct, governance and directors’ duties failures and the strengthening of insider trading prosecutions. Misconduct damaging market integrity - including continuous disclosure breaches and market manipulation - remains an enduring priority.
For companies raising capital, the practical implication is that the quality of disclosure, the robustness of governance frameworks and the rigour of compliance with ASX Listing Rules will face close scrutiny. In an environment where ASIC has doubled the number of new investigations and nearly doubled the number of new matters filed in court, the cost of getting it wrong may be high.
Posted by Toby Norgate and Paul Chatziopoulos on May 12, 2026
