KUALA LUMPUR (Nov 15): Companies in Southeast Asia have raised US$6.3 billion (RM28.92 billion) from 136 initial public offerings (IPOs) to date this year, a drop of 52% from a record US$13.3 billion from 152 IPOs in the full year of 2021, according to Deloitte.
In a statement on Tuesday (Nov 15), the professional services firm said this indicates a higher number of smaller listings this year, mostly from smaller companies that needed the platform to raise funds in today’s challenging market environment.
It said that 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 listings in anticipation of better market conditions.
Deloitte said 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 the US and UK witnessing record amounts of IPO funds raised.
It said Southeast Asian capital markets too enjoyed a successful year in 2021.
The momentum slowed down this year, albeit with Southeast Asia weathering the crash slightly better with a 52% drop, compared with a 95% drop in IPO proceeds in the US and a 91% decrease in the UK, it said.
Deloitte said the Malaysian IPO market has emerged from the pandemic, with a 102% increase in the proceeds raised at US$681 million.
It said this surge was driven by investors’ demand for good fundamental companies.
In particular, the firm said the number of ACE Market listings doubled from 11 in 2021 to 22 in 2022, which was impressive given the economic climate.
It said the interest rate hike cycle would potentially encourage more companies with good business fundamentals to seek a listing, as they can leverage the equity market for a diversified and cheaper funding base.
Deloitte Malaysia disruptive events advisory leader Wong Kar Choon said notwithstanding the impact of the upcoming 15th general election on the IPO market, there remains a steady pipeline of companies looking to tap the capital market.
“The strong performance in 2022, against a backdrop of global inflation, rising interest rates and the threat of a recession, is proof of resilience of the Malaysian capital market,” he said.