Asean initial public offering (IPO) proceeds down 20 percent year on year to $5.6 billion in 2023, EY said Friday.

According to the firm’s EY Global IPO Trends 2023, ASEAN IPO market remained robust in 2023, with a total of 157 deals, up 3 percent from 152 deals in 2022.

However, the region’s total IPO proceeds down from $6.9 billion in 2022.

According to EY, Asean exchanges that were the most active in 2023 were Indonesia (79 IPOs raising $3.6 billion), Thailand (37 IPOs raising $1.1 billion) and Malaysia (32 IPOs raising $801 million).

The three Asean countries recorded an increase in the number of IPOs versus a five-year average.

Meanwhile, Singapore and Philippines hosted six and three IPOs on their exchanges, raising $35 million and $75 million respectively.

“Here in Asean, we saw the average deal size falling. Well-capitalized companies may wait out until valuation improves,

“Realistic pricing and strong post-IPO performance may also encourage companies with strong governance, a good equity story and are prepared for IPO, to list,” said Chan Yew Kiang, EY Asean IPO Leader.

“Companies’ performance post-IPO will be monitored closely, and if positive, may spur new listings,

“While high interest rates will continue to have an impact on investors sentiments, we observed that there is increasing interest for companies in the region to explore cross-border listings,” he added.

It is noted that in Singapore, there were six completed IPOs with $35 million raised. This does not include Singapore’s de-special purchase acquisition company (SPAC) transactions at $676 million.

“In December 2023, we saw Singapore’s first completed de-SPAC and the first live-streaming company to be listed on the SGX,

“This is an encouraging sign for fast-growing companies in the technology, life sciences and green industries to consider SGX or other Asean exchanges when looking to list,” Chan said.

According to EY, this year, 732 companies went public in Asia-Pacific raising $69.4 billion, a year on year fall of 18 percent and 44 percent respectively.

Facing economic and geopolitical headwinds, EY said 2023 was challenging for Asia-Pacific’s IPO markets, with the two powerhouses of China and Hong Kong continuing
to decline in volume and value.

The average deal size of cross-border listings from China to the United States also fell to its lowest level in 20 years, with a 93 percent drop from its 2021 levels.

However, China remained a vital source of IPO funding, contributing over 40 percent of global proceeds in 2023. 

In the Asia-Pacific IPO market, well-capitalized companies backed by private equity and venture capital in the environmental, social and governance (ESG) and technology spaces have the capital to wait out until valuation improves.

Realistic pricing and post-IPO performance may encourage some of these companies that are prepared for IPO with strong governance and a good equity story to list in 2024.

Overall, the global IPO market closed 2023 with 1,298 IPO raising $123.2b.

According to EY, the global IPO market in 2023 has experienced shifting landscapes with improved Western market sentiment counterbalanced by China's cool-down, as well as a contrast between hot developing market small-cap deals and lackluster large offerings.

When comparing to 2022, IPO proceeds in 2023 lagged last year’s tepid pace by roughly a third, although deal volumes have picked up in both the Americas and Europe, the Middle East, India and Africa (EMEIA) regions.

Despite a strong market rally and low volatility index on the back of positive economic data, public offerings have remained subdued in many developed markets, with the exception of a brief September window in the United States, according to EY. 

After two years of muted listings, it said IPO issuers and investors were keen to take the ride of a market upswing, but this enthusiasm dampened after September when high-profile IPOs sank underwater, impacting market sentiment.

Equity investor fixation on mega technology stocks in the face of macro uncertainty also left less appetite for new listings.

Extraordinarily aggressive monetary policies were another major factor affecting IPO activity, superseding the influence of overall stock market performance.

Benchmarking against five-year average IPO activity, highlights include Indonesia, Malaysia and Turkey notching increases in deal volume and proceeds.

Meanwhile, India, Saudi Arabia and Thailand recorded an increase in the number of IPOs versus five-year average.

In contrast, Hong Kong’s IPO market experienced a 20-year low in proceeds this year, and the pace of IPO issuance in Mainland China slowed in the latter half of 2023.

The industrials and consumer sectors had positive movement this year, with industrials having the most deals and consumer being the only sector to increase by both IPO volume and proceeds.

In contrast, the technology sector continued to experience declines driven by underwhelming investor reception to high-profile tech IPOs in the United States and generative artificial intelligence (GenAI) startups still being in the venture capital stage.

Despite this, technology IPOs still led the pack for proceeds for 2023.

There has also been a significant downturn in IPO volume and proceeds within the health and life sciences sector – particularly in China and the United States.

The number of companies backed by private equity and venture capital within this sector plummeted by 78 percent since 2021.

Sector IPO trends reflect shifting global economic and supply chain dynamics, which bring new winners and losers across sectors – although strong fundamentals still win out overall.

While the number of Americas IPOs in 2023 was up 15 percent compared with 2022, EY said the region’s proceeds jumped nearly three times that of 2022 due to several high-profile deals.

In total, 153 deals raised US$22.7 billion, with over 85 percent of them listing on United States exchanges.

The region had seven deals that raised over $500 million in 2023 versus just four in 2022, but smaller deals continue to dominate IPO activity on United States exchanges.

Brazil’s IPO market surpassed a two-year absence of listings amid global instabilities, marking the most prolonged drought in over two decades.

In Canada, its main exchange featured only one IPO each in 2022 and 2023 – this level of IPO activity is unprecedented on this exchange over the last two decades.

Overall in the Americas, weak IPO trading performance, rising interest rates and geopolitical concerns have contributed to challenging capital raising conditions for companies seeking to access the public markets.

According to EY, the EMEIA IPO market is on its path to recovery, with a 7 percent rise in volume, even with a 39 percent decrease in proceeds, on the back of large deals from Middle East and North Africa (MENA), heightened activity in India and Central Asia region (CESA), as well as a few high-profile cross-border IPOs to the United States.

This region rounded out the year with 413 deals, raising $31.1 billion.

And, even though five of the world’s largest ten deals were from EMEIA, the region had a greater number of smaller IPOs than large ones compared with 2022, hence the fall in total proceeds.

MENA continued to dominate the top ten EMEIA IPOs in 2023, accounting for six of those IPOs.

In the United Kingdom, challenging market conditions, compounded by high inflation and elevated interest rates, have muted IPO activity.

Overall in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment.

In various countries, governments and regulators are taking steps to stimulate capital markets to boost investment in disruptive innovation.

“Enthusiasm for IPOs is high and smaller deals are emerging with improved after-market performance,” said George Chan, EY Global IPO Leader.

“While many governments are taking measures to boost IPOs, activity is particularly strong in high-growth economies,

“Before monetary policy eases and geopolitical climate stabilizes, IPO-bound companies should keep their eyes on building fundamentals and managing price expectations to capitalize on the fleeting windows as 2024 progresses,” he added.

Globally, moderating inflation and potential 2024 interest rate cuts could attract investors back to IPOs by improving liquidity and return outlooks, according to EY.

However, it reckoned that sustained geopolitical instability may undermine confidence.

Broadly, it said the year ahead hinges on improving macro backdrop for an IPO revival as companies eagerly await more favorable market conditions to widen the IPO windows.

When headwinds abate, it opined confidence may rebound and markets will present opportunities for IPOs again.

It also noted that IPO candidates looking to go public in 2024 will need to be well-prepared.

Key factors to consider are: inflation and interest rate, government policies and regulations, recovery of economic activities, geopolitical tensions and conflicts, ESG agenda, and global supply chain.

Multitrack options should also be considered, from alternative IPO processes (direct listing or dual and secondary listings) to other financing methods (private capital, debt or trade sale), said EY.

EY: SEA IPO volume, value rise in first half amid slowing global market