Asean IPO proceeds treble in Q4 2020 on larger deals: EY

PROCEEDS from initial public offerings (IPOs) in Asean rose significantly in the fourth quarter of 2020, though the number of listings held steady, according to the EY Global IPO Trends: Q4 2020 report on Thursday.

This could signal the return of more medium-cap IPOs in 2021, rather than just small-cap ones, said the report.

There were 34 IPOs on Asean exchanges in Q4 2020, compared to 33 in the previous quarter. But average deal size rose, with proceeds trebling to US$3.3 billion, from US$1.1 billion previously.

Exchanges in Thailand were by far the most active, with 19 IPOs that raised US$1.9 billion. This was followed by Malaysia, with 5 IPOs raising US$407 million; Indonesia, with 5 IPOs raising US$25 million; Singapore, with 4 IPOs raising US$510 million; and the Philippines, where 1 IPO raised US$522 million.

For the full year, Asean IPO activity declined from 2019, with 111 IPOs - down 13 per cent - and US$7.7 billion raised, down 5 per cent.

But there were two notable IPOs of over US$1 billion, both in Thailand - Central Retail Corp, which raised US$2.3 billion, and SCG Packaging, which raised US$1.3 billion.

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Asean's full-year decline in IPO performance was in contrast to the wider Asia-Pacific region, where exchanges in Greater China led a stronger 2020 performance.

In the Asia-Pacific, activity in 2020 was 20 per cent higher by volume, with 822 deals, and 45 per cent higher by proceeds, at US$136.2 billion - the highest since 2010 - than in 2019.

Leading the way were industrials and technology IPOs, with 181 IPOs raising US$20.8 billion and 180 IPOs raising US$38.7 billion respectively. This was followed by the materials sector, with 95 IPOs raising US$7.4 billion.

With exchanges in Greater China seeing improvement and Asean exchanges seeing steady IPO numbers with higher proceeds, this prompts "cautious optimism that with a faster though uneven recovery in the region in 2021, the need for companies to access capital, boost liquidity, transform and drive growth will lead to an improving IPO market both from a number and size perspective", said EY Asean IPO leader Max Loh.

In other regions, the Americas saw IPO numbers rise 30 per cent to 282 and proceeds increase 78 per cent to US$97.9 billion, while Europe, the Middle East and Africa saw 7 per cent more deals but a 43 per cent fall in proceeds, with 259 IPOs raising US$33.9 billion.

Overall, global IPO volumes rose 19 per cent to 1,363 and proceeds increased 29 per cent to US$268 billion in 2020.

Market volatility in the first half of 2021 was the highest since the global financial crisis, but this quickly subsided, said EY Global IPO leader Paul Go.

"Looking to the first half of 2021, continued fiscal stimulus, abundance of liquidity and optimism linked to Covid-19 vaccines should sustain IPO momentum," he said.

"However, investors should beware of any potential market correction, especially for those companies that have seen their share prices make substantial gains from the market rally in 2020."