Number of IPO listings expected to hold steady across Southeast Asia in 2022, but funds raised halved compared to previous year
- Compared to 2021, Southeast Asia in 2022 sees a 52% fall in IPO funds raised, even though IPO count and IPO market capitalisation are expected to hold steady.
- Thailand and Indonesia are top of the table in Southeast Asia for 2022; each raised above US$2 billion, collectively accounting for 76% of total funds raised across Southeast Asia.
- Southeast Asia IPO markets are peppered with smaller-sized listings this year, bolstered by two blockbuster listings each having raised US$1 billion and above - PT GoTo Gojek Tokopedia Tbk and Thai Life Insurance Public Company Limited.
- REITs, the traditional stronghold in Southeast Asia saw only four listings in 2022 - a stark contrast from ten in 2021, that accounted for 23% of all funds raised across all SEA exchanges last year.
MANILA, 15 November 2022 — With momentum slowing down from 2021, initial public offering (IPO) funds raised were subdued across the capital markets in Southeast Asia for the first 10.5 months of this year, even though the IPO count and IPO market capitalisation are expected to hold steady from the previous year.
Data by Deloitte as at 11 November 2022 showed that companies in Southeast Asia raised US$6.3 billion from 136 IPOs to-date this year, 52% down from a record US$13.3 billion from 152 IPOs in the full year of 2021.
This indicates a higher number of small listings this year, mostly from smaller companies that needed the platform to raise funds in today’s challenging market environment. With only two blockbuster IPOs this year - PT GoTo Gojek Tokopedia Tbk and Thai Life Insurance - this could mean that the bigger companies are holding out and postponing their listing in anticipation of better market conditions.
The COVID-19 pandemic spurred a flood of new retail investors into the stock market and consequentially there was a boom in the IPO market globally in 2021, with US and UK witnessing a record amount of IPO funds raised. Southeast Asia capital markets too enjoyed a successful year in 2021. This momentum slowed down this year, albeit with Southeast Asia weathering the crash slightly better with a 52% drop, compared to the 95% and 91% decrease in IPO proceeds in US and UK respectively.
Ms Tay Hwee Ling (郑惠玲), Disruptive Events Advisory Leader (德勤东南亚及新加坡上市与并购鉴证咨询服务主管), Deloitte Southeast Asia and Singapore on the Southeast Asia capital markets: “Prior to the COVID-19 pandemic, the IPO activity moves in tandem with the economy and GDP growth. However, the inverse has happened in the last two years. Just as the world is winning the fight against the pandemic, the reopening of the world economies and borders have fuelled a rise in global inflation from 4.7% in 2021 to 8.8% in 2022, and consequently an increase in Federal interest rate of almost 4% over the course of the year in a bid to tame the surging inflation. In the face of these macroeconomic factors, Southeast Asia IPO market has held up considerably well, while we continue to see the growth potential in our economies.”
Thailand saw the highest IPO funds raised among the Southeast Asia exchanges, with a total of US$2.5 billion raised by 28 IPOs. As a sign that things are back to pre-pandemic levels, the amount raised this year is relatively on par with the amount raised from 2017 to 2019 (above US$2 billion each year). In years 2020 and 2021, the amount raised each year was more than US$4 billion.
Notably, this year, foreign investors, who were largely absent during the pandemic years, are back investing in the Thai stock market.
“We continue to see several IPOs from a diverse pool of industries on the Stock Exchange of Thailand (“SET”), including fast-moving consumer products, financial services, and construction businesses. In particular, this year, we saw the first REIT which invested in airport leasehold properties. There are 39 companies in the pipeline expecting to list by 2023,” said Ms Wilasinee Krishnamra, Disruptive Events Advisory Leader, Deloitte Thailand.
At US$2.3 billion, Indonesia is the runner-up with funds from 54 IPOs in Southeast Asia in 2022. PT GoTo Gojek Tokopedia Tbk single-handedly accounts for US$1.1 billion of IPO funds raised and takes the top spot on the region’s leader board this year. PT Global Digital Niagra Tbk, better known as “BliBli”, comes in second with US$516 million raised. GoTo and Blibli join a growing group of tech companies in Indonesia that have listed in recent years.
Ms Imelda Orbito, Disruptive Events Advisory Leader, 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 the Southeast Asia. It is encouraging to see GoTo and most recently, BliBli, achieve high funding amidst the 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 expected to list in the next two months, as well as companies in the consumer non-cyclicals industry.
The Malaysian IPO market has emerged from the pandemic with a 102% increase in the proceeds raised at US$681 million. This surge has been driven by investors’ demand for good fundamental companies. In particular, the number of ACE listings doubled from 11 in 2021 to 22 in 2022, which is impressive given the economic climate. The interest rate hike would potentially encourage more companies with good business fundamentals to seek listing as they can leverage on the equity market for a diversified and cheaper funding base.
“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,” said Mr Wong Kar Choon (黄家骏), Disruptive Events Advisory Leader, Deloitte Malaysia.
Singapore saw nine IPOs raise US$421 million in the first 10.5 months of this year, comprising three Special Purpose Acquisition Companies (“SPAC”) listings which raised US$389 million and six Catalist IPOs which raised US$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 onboard.
“Since 2010, there has been at least one REIT or Business Trust listing on the Singapore Exchange (“SGX”) However, we observe an absence of the REITs for the first 10.5 months this year. On the bright side, there is an on-going 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 two to five 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 Singapore to remain attractive for businesses to set up shop,” Mr Darren Ng (黄铭泉), Disruptive Events Advisory Deputy Leader, Deloitte Singapore.
Outlook for Southeast Asia
On the outlook for the remaining year through to 2023, Ms Tay commented, “There is still room for high growth in Southeast Asia, as the region emerges from the COVID-19 crisis. We expect IPO activity to go through cyclical highs and lows, as the market re-calibrates from the pandemic mindset to ‘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 capital markets.”
Note to editors and reporters: All data is accurate as at 11 November 2022 and does not include upcoming IPOs from 14 to 15 November 2022. The full year 2022 IPO Report will be available in January 2023.
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