IPO funds halve across Southeast Asia compared to previous year

With just two blockbuster IPOs this year, PT GoTo Gojek Tokopedia Tbk and Thai Life Insurance, it is possible that the larger corporations are delaying their listings in expectation of more favourable market circumstances before going public.

Tay Hwee Ling, disruptive events advisory leader at Deloitte Southeast Asia and Singapore noted, “Prior to the pandemic, the IPO activity moved in tandem with the economy and GDP growth. However, the inverse has happened in the last two years. The reopening of the world economies and borders has fuelled a rise in global inflation from 4.7 per cent in 2021 to 8.8 per cent in 2022, and consequently an increase in the federal interest rate of almost 4 per cent over the course of the year in a bid to tame the surging inflation. In the face of these macroeconomic factors, the Southeast Asia IPO market has held up well thanks to the growth potential in our economies.”

With a total of $2.5 billion raised by 28 IPOs, Thailand topped the Southeast Asian markets. As evidence that things have returned to pre-pandemic levels, the amount raised this year is comparable to that between 2017 and 2019 (almost $2 billion each year). Each year in 2020 and 2021, the sum raised exceeded $4 billion.

Foreign investors, who were notably absent during the pandemic, have returned to the Thai stock market this year.

The Stock Exchange of Thailand continues to witness IPOs from a variety of sectors including fast-moving consumer goods, financial services, and construction companies. Wilasinee Krishnamra, disruptive events advisory leader at Deloitte Thailand predicts that 39 Thai firms are now preparing to go public by 2023.

Meanwhile, Indonesia ranks second with $2.3 billion in capital from 54 IPOs in Southeast Asia in 2022. This year, PT GoTo Gojek Tokopedia Tbk alone accounted for $1.1 billion in IPO funds raised, placing it at the top of the regional leaderboard.

PT Global Digital Niagra Tbk, also known as BliBli, ranks second in terms of funds raised with $516 million. GoTo and Blibli join a growing number of Indonesian technology businesses that have gone public in recent years.

Imelda Orbito, disruptive events advisory leader at Deloitte Indonesia commented, “The Indonesia IPO capital market had a good start in the first half of 2022, and while it slowed down in Q3, Indonesia remains one of the leading IPO markets in Southeast Asia. It is encouraging to see GoTo and most recently, BliBli, achieve high funding amidst global concerns such as the Russia-Ukraine situation and rising inflation. We remain optimistic that tech IPOs will continue to grow with more new tech companies and those in the consumer non-cyclicals industry expected to list in the next two months.

The IPO market in Malaysia has recovered from the pandemic with 102 per cent higher profits generated ($681 million).

This increase might be attributed to the demand that investors have placed on fundamentally sound businesses. Given the state of the economy, the fact that the number of ACE listings increased from 11 in 2021 to 22 in 2022 and then doubled again is amazing. The increase in interest rates has the potential to inspire more businesses that have solid business fundamentals to seek listing on a public exchange so that they can take advantage of the stock market's ability to provide a more diverse and cost-effective source of finance.

Disruptive events advisory leader for Deloitte Malaysia Wong Kar Choon stated, “Notwithstanding the impact of the elections on the IPO market, there remains a steady pipeline of companies looking to tap the capital markets. The strong performance in 2022, against a backdrop of global inflation, rising interest rates, and the threat of a recession, is proof of the resilience of the Malaysian capital market.”

In the first 10.5 months of 2022, nine IPOs in Singapore raised a total of $421 million. This included three Special Purpose Acquisition Companies (SPAC) listings, which brought in $389 million, and six IPOs on the Catalist, which brought in $32 million.

It is a positive start to the SPAC framework introduced in Singapore in September 2021. SPACs in Singapore have a 24-month deadline to de-SPAC, with the option to seek a 12-month extension. It is expected that successful de-SPACs will encourage more SPAC listings to come on board.

Darren Ng, disruptive events advisory deputy leader at Deloitte Singapore added, “Since 2010, there has been at least one REIT or Business Trust listing on the Singapore Exchange. However, we observed an absence of the REITs for the first 10.5 months this year. On the bright side, there is an ongoing shift in the capital flow and relocation of head offices into Singapore. This brings more opportunities to Singapore’s IPO market. If our market is able to capitalise on this shift, the next 2-5 years could very well be the golden years for our IPO market. Furthermore, Singapore’s political stability, successful handling of the pandemic, and smooth re-opening of borders will allow it to remain attractive for businesses to set up shop.”

Regarding the outlook for Southeast Asia, Tay Hwee Ling believes there is still room for high growth in Southeast Asia as the region emerges from the COVID-19 crisis.

“In terms of the outlook for the remaining year through to 2023, we expect IPO activity to go through cyclical highs and lows as the market re-calibrates from the pandemic mindset into more regular programming. While valuations may be generally lower for tech companies now, the ones with solid business fundamentals and the ability to prove profitability will still be able to achieve optimal market valuation and benefit from the markets,” he said.

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