ASEAN saw a total of 94 initial public offerings (IPOs) raising $2.5 billion year to date, down from 127 IPOs raising $4.9 billion a year ago, Ernst & Young Global Limited (EY) said Thursday.
The global accounting firm said in a statement that in third quarter of 2024 alone, there were 28 IPOs in the region with proceeds totaling $1.1 billion, representing a surge in proceeds of 100 percent from the previous quarter that saw 29 deals totaling $600 million.
This was primarily driven by the prominent listing of 99 Speed Mart Retail Holdings Bhd. from Malaysia, which stood as the second-largest IPO in the region year to date.
Across ASEAN, other active exchanges year to date include Indonesia (34 IPOs raising $300 million), Thailand (22 IPOs raising $600 million), Philippines (3 IPOs raising $200 million).
Singapore and Sri Lanka each had one IPO that raised $19.5 million and $1.5 million respectively.
“With interest rates easing and companies gearing up for growth in the region, IPO activities are expected to pick up in the next quarter and year ahead,” said Chan Yew Kiang, EY ASEAN IPO Leader.
According to him, strong fundamentals and demands, together with regulators increasingly exploring policies to support growth companies to tap the capital markets for growth, also bodes well for the markets.
“We should also expect growing interest in cross-border listings as companies seek to achieve brand equity in other markets that they are venturing into,” he added.
Kevin Chew, Senior Executive Director with the Strategy and Transactions team at EY in Malaysia, said the economic climate in Malaysia is showing signs of robust positivity, reflected in the invigorated pace of the Malaysian IPOs.
According to him, in the first nine months of 2024 alone, the market has witnessed a tally of 36 IPOs.
“Notably, the third quarter contributed significantly to this count with 14 IPOs,
This surge in activity marks a resurgence for Malaysia, boasting the highest number of IPOs since 2006, and signals a strong investor confidence,” he added.
According to EY, Asia-Pacific has made a notable turnaround in the third quarter.
By overcoming earlier declines, the region has contributed to an 11% quarter on quarter increase in global IPO numbers.
This rebound, marked by increased activity in mainland China, Indonesia, Malaysia and South Korea, has injected confidence into the global market during a period of heightened uncertainty, said EY.
Amid a global economic slowdown, market volatility, geopolitical shifts and monetary easing, the global IPO market in the third quarter has also shown signs of cautious optimism, according to EY.
Despite a dip in year-over-year volumes by 14 percent to 310 IPOs and proceeds by 35 percent to $24.9 billion, EY noted the third quarter did modestly outpace the first two quarters of 2024 in IPO launches.
Navigating through a complex economic and geopolitical landscape, marked by the start of a global interest rate easing cycle, third quarter’s IPO activity has contended with heightened market volatility, EY said.
Despite these challenges, it noted the Americas and Europe, the Middle East, India and Africa (EMEIA) demonstrated resilience in the first three quarters of 2024, with EMEIA’s IPO proceeds up by 45 percent compared to the same period last year, helping to mitigate the global market’s overall downturn.
EY highlighted the persistently lower private equity and venture capital (PE and VC) exit activity over recent years has created a growing backlog of portfolio companies poised for monetization.
It noted a resurgence in PE-backed mega IPOs and VC-backed unicorns is taking shape, as current valuation levels become more favorable for launching mature, high-value portfolio companies into the public market.
According to EY, in the first nine months of 2024, PE and VC-backed IPOs made up six of the top ten global IPOs, accounting for over one-third of the total global IPO proceeds.
In the Americas, these IPOs accounted for 52 percent of the total proceeds, underscoring a greater willingness among PE and VC firms to exit in the current IPO landscape.
Cross-border listings have also seen a significant uptick, EY said.
In the first three quarters of this year, 77 companies chose to list abroad, up from 64 in the same period last year, a 20 percent year on year increase.
It is noted that Since 2023, foreign-domiciled issuers have represented approximately 52 percent of IPOs on US exchanges, reaching a 20-year high.
Concurrently, with a contrasting stock market performance between the US and China this year, the market value gap between the two countries has reached a record high in the third quarter, said EY.
EY also highlighted that over the past two years, more than 60 artificial intelligence (AI) companies have gone public annually, with about half turning a profit.
According to the firm, approximately 50 AI companies are currently in IPO registration, demonstrating sustained investor interest in AI-driven innovations.
The remainder of 2024 is expected to see the IPO market influenced by central bank policies, geopolitical developments and key election outcomes, said EY.
It noted optimism is fueled by lower interest rates and easing inflation, which are likely to encourage new listings and a resurgence in sectors sensitive to borrowing costs.
It also expect strong performance in key markets such as the US, Europe and India to support IPO activity.
“Cross-border listings should continue to thrive, and significant public debuts, especially those backed by PE firms and from spin-offs and carve-outs, are anticipated as they seek favorable public entry points,” it said.
EY : Southeast Asia’s IPO deals down to $1B in first quarter