Southeast Asian companies to accelerate IPO plans

August 07, 2020 | 13:08
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A number of Southeast Asian tech and consumer durables companies are mulling over applying for initial public offering (IPO) in latter 2020 while startups in Vietnam are looking at choppy waters with their IPO dreams.

In Malaysia, home improvement retailer Mr DIY has re-started the process for its up to $500 million IPO on the back of business recovery, according to Reuters.

Founded in July 2005, the Malaysia-based company has now grown into the largest home improvement retailer across the region, selling car accessories, toys, gifts, and hardware.

southeast asian companies to accelerate ipo plans
The Malaysia-based company Mr DIY has re-started the process for its up to $500 million IPOs

In each store, Mr DIY offers a wide selection of more than 14,000 types of products at some of the lowest prices on the market.

However, sources from Reuters mentioned that the company had put its IPO plans on hold in March because of market turbulences from the pandemic.

Earlier this month, fibre broadband services provider Converge ICT Solutions filed for an IPO with the deal value of up to $725 million.

The Philippines-headquartered company is considered one of the fastest-growing fibre internet and other digital consumer-centric services providers in the country.

Meanwhile, Areit, the Philippines' first real estate investment trust, is also raising $275 million.

"IPOs which had been planned before the pandemic are just waiting for the right moment to come back," said Tham Tuck Seng, capital markets partner at PwC in Singapore, cited from Reuters. "We've seen heightened interest from healthcare issuers to list as the sector has become more important," he said, also highlighting interest from consumer-tech firms.

According to Refinitiy, except $3 billion raised by Thailand’s Central Retail a few months ago, total funds raised from IPOs in Southeast Asia have dropped to $1.4 billion so far this year, lower than the $2.9 billion in the same period of last year.

Meanwhile, data from Dealogic showed that the Hong Kong market is starting to heat up again with $38 billion raised this year in IPOs and secondary listings.

Sources cautioned that a pullback in global markets in recent weeks could still hamper the listings progress of Southeast Asian companies, but launches were being readied for later this year.

In Thailand, SCG's packaging subsidiary is showing intentions of launching a $1 billion IPO which might happen in the fourth quarter of 2020.

In Vietnam, The COVID-19 lockdown has forced local startups to put their plans of initial public offerings on hold.

southeast asian companies to accelerate ipo plans
A number of Southeast Asian tech and consumer durables companies are mulling over applying for initial public offerings (IPOs) in the later 2020. However, startups in Vietnam might encounter choppy waters with their IPOs dream.

Nguyen Anh Nhuong Tong, chairman of Yeah1, said, “The widespread outbreak has posed great challenges and chaos to the society and economy, thus delaying their IPO plans.”

Many startups, especially “money-burning” companies in e-commerce and fintech, are looking to access public capital in a bid to expand their operations and strengthen their footprints.

Tran Ngoc Thai Son, founder and CEO of Tiki, previously proposed the Vietnamese authorities to loosen the IPO regulations for startups tapping into public funds, said a VIR source.

However, companies need to qualify three-year profitability requirements to file for an IPO in Vietnam. This makes Tiki and other startups ineligible for listing on the Vietnamese stock market given that they have been wilfully suffering mounting losses to scale up presence.

As of now, only three tech companies – Yeah1, FPT, and ADG – have been listed on the local stock exchange among the 1,702 businesses in the database of the National Business Registration Portal.

Looking on the bright side, capital inflows to Southeast Asian startups nearly doubled in the first half of 2020, despite the COVID-19 crisis.

Particularly, the total value of investment deals in Southeast Asia jumped 91 per cent to $2.7 billion while the number of transactions rose by 59 per cent to 184, which is higher than the 116 transactions in the same period last year.

E-commerce startups are considered to be the most appealing, attracting $691 million, followed by the sectors of logistics ($360 million) and fintech ($496 million).

By Nhat Minh

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