The Southeast Asia (SEA) region experienced a year on year rise in initial public offering (IPO) volume of 26 percent and value of 31 percent in the first half amid slowing global market, EY said in a statement on Tuesday.

According to EY Global IPO Trends Q2 2023, the SEA IPO volume rose to 82 deals in the first half from 65 deals a year ago while its IPO value grew to $3.3 billion from $2.5 billion.

This was despite global IPO market saw 5 percent and 36 percent decrease year over year on IPO deals and value to 615 and $60.9 billion.

EY noted that the modest global market results reflect slower global economic growth, tight monetary policies and heightened geopolitical tensions.

However, it said some emerging markets are booming with IPO activities, as they benefited from the global demand for rich mineral resources, their vast population, growing unicorns and entrepreneurial small- and medium-sized enterprises (SMEs).

According to EY, Indonesia has been a shining light in the region, hosting 45 IPOs in the first half of the year, with total proceeds of $2.2 billion.

Boasting a vast population and robust economic growth, EY said the country is propelled by its rich mineral reserves – vital for green energy production – and strategic privatization of state-owned enterprises.

Aside from Indonesia, Malaysia has also seen a string of small-cap tech IPOs raising $500 million in 16 deals, while Thailand has hosted listings from a diverse range of sectors that raised $500 million in 15 deals in the first half of 2023.

This was followed by Philippines with three IPOs raising $77.7 million and Singapore with three IPOs raising $21.1 million.

Year to date, the Asia-Pacific IPO market has maintained its position as the global leader in IPO volume and value, with an approximate 60 percent share.

Of the top ten global IPOs, half were from China and one was from Japan.

The region saw 371 IPOs raising $39.4 billion in this period, a year on year fall of 2 percent and 40 percent respectively.

According to EY, the proceeds were down significantly due to a cooler-than-expected China IPO market, with many large IPOs waiting on the side-line.

It noted that Indonesia has surpassed Hong Kong in the global stock exchange rankings by deal number.

Overall, larger deals came to the market in the second quarter compared to the first quarter, even though it has been a slow recovery.

While the technology sector continues to be the leading sector in IPO activities to date in 2023, EY said IPO proceeds raised by companies of the energy sector have dwindled on the back of softer global energy prices.

As well, cross-border activity has experienced a significant surge in both volume and proceeds, primarily attributed to the growing influx from China into the United States and a steady flow into the Swiss Stock Exchange.

Meanwhile, the special purpose acquisition company (SPAC) market continued to be challenged with negotiations becoming increasingly complex.

According to EY, there is still an exorbitant number of SPACs yet to announce or complete a de-SPAC, which are facing liquidation by the expiration period in the next six months.

However, it does expect SPAC IPO activities to return to a more sensible and sustainable level that were seen pre-2021.

While the number of IPOs remained flat, the Americas region saw an increase in proceeds of 86 percent, raising $9.1 billion year on year.

This growth was primarily attributed to a single mega spin-off IPO, which happened to be the largest United States IPO since November 2021.

The US experienced an uptick driven primarily by a few large deals and recent improvements in market sentiment could be a sign for more US IPO activity later in 2023 or 2024, said EY.

Despite the positive developments, EY opined that it may take the overall Americas IPO market longer to recover than many market participants forecasted at the beginning of the year due to the unforeseen banking crisis in 2023.

Europe, the Middle East and Africa (EMEIA) IPO activity, on the other hand, has continued to shrink, with 167 listings raising $12.4 billion year to date, a 12 percent and 50 percent fall year on year, respectively.

Despite this, the region kept its position as the second largest IPO market with 27 percent of all IPO deals, and saw the second biggest IPO at $2.5 billion.

India exchanges also broke a two-decade streak, jumping to the top spot in deal count.

However, inflation levels in most European countries remain challenging, and the lack of liquidity continues to hold back IPO activity, said EY.

“Against the backdrop of a divergent global economy and unpredictable geopolitical landscape, some stock markets are reaching a long-time high and enjoying low volatility,” said Paul Go, EY Global IPO Leader.

According to him, certain theme-centric sectors such as technology and clean energy are signaling an upswing in IPO activity.

“Large, well-established companies are demonstrating enduring resilience, while growth narratives with more realistic and acceptable valuation are becoming more receptive by the market,

“In this shifting environment, companies need to prepare now to be ‘IPO-ready’ for any forthcoming windows,” he added.

A resurgence in global IPO activity is anticipated to start late 2023 as economic conditions and market sentiment gradually improve with the tight monetary policy entering its final stage, according to EY.

After the one mega spin-off IPO debut in the US that outshone all other traditional IPOs, it said there are strong indications that this trend will persist.

It said large corporate spin-offs and carve-out listings will likely surface across major markets, as companies seek to create more shareholder values through divestiture while investors lean toward mature, profit-making businesses amid a yet-to-revive IPO market.

EY also said that understanding the different requirements of each IPO market that companies plan to enter is essential to meet investor expectations and avoid potential delays due to regulatory issues.

It said wnvestors will continue to be more selective, orienting toward companies with solid fundamentals and proven track record.

All options, from alternative IPO processes (direct listing or de-SPAC merger) to other financing methods (private capital, debt or trade sale), should be considered, it added.

EY : Global IPO proceeds down 61 percent to $21.5B in 1Q