Record capital raising in Philippines, Indonesia in 2021, with more to come
SOUTH-EAST Asia's capital markets recorded robust initial public offering (IPO) activities in 2021, with several notching their best-ever years in terms of IPO capital raised.
Regional exchanges have benefitted from having large domestic markets. And a substantial pool of companies looking to raise capital publicly have also chosen to stay local, in view of sufficient liquidity on their markets as well as investor familiarity - particularly among retail investors.
The 5 major Asean exchanges - Singapore, Malaysia, Indonesia, Thailand and the Philippines - recorded 131 IPOs in total, up from 109 in 2020, Bloomberg data showed. The total value of US$12.1 billion was also an improvement over the US$7.6 billion from 2020. And the 2021 IPO cohort saw 5 companies that raised over US$1 billion, up from just 2 the year earlier.
The largest deal in 2021 came from the listing of Indonesian e-commerce company Bukalapak on the Indonesia Stock Exchange in August, with an offer size of US$1.5 billion. This listing, together with the US$1.3 billion IPO of Dayamitra Telekomunikasi (Mitratel), boosted Indonesia to lead the region's exchanges in terms of IPO proceeds.
The Indonesia Exchange had 53 IPOs raising a total of US$4.3 billion in 2021, its best-ever showing.
Ho Cheun Hon, head of South-east Asia equity capital markets at Credit Suisse, said Indonesia is likely to see big tech listings play a part in 2022.
"South-east Asia tech private capital raising activity (in 2021) has been very robust," he said. "A lot of these tech companies are 1 or 2 funding rounds away from an IPO, so it's a leading indicator of an interesting IPO pipeline."
Meanwhile, Thailand, which has been the region's leader in terms of funds raised in recent years, ranked a close second with US$4.1 billion raised across 41 listings. Its tally was helped by the billion-dollar listings of PTT Oil & Retail Business as well as lender Ngern Tid Lor.
Large domestic companies are willing to list in Thailand because of the track record of other such listings, said Tham Tuck Seng, capital markets leader at PwC Singapore. "They have enough liquidity to absorb those listings, so Thailand is already proving to be a very strong competitor to Singapore."
The Philippine Stock Exchange (PSE) - one of the smaller exchanges in the region, also put on a stellar showing in 2021 with 8 IPOs raising a record US$2.4 billion.
The billion-dollar listing of food manufacturer Monde Nissin Corp helped. But real estate investment trusts (Reits) have also contributed, with 4 going public in 2021 amid friendlier regulations for such vehicles.
Ho from Credit Suisse expects more Reit listings on PSE, "though there might be a lull (in 2022) due to the elections".
He added that South and South-east Asia equity markets have also benefited somewhat from investors becoming more risk averse in relation to China.
In terms of the regional performance, Vineet Mishra, co-head for Asean investment banking at JPMorgan Chase, said: "We do think that the amount of capital that has been raised (in 2021) is not a one-off. There will be ups and downs, but there are a lot of good quality companies growing very fast, scaling up very, very quickly, and they can all raise substantial amounts of capital."
He noted that there have been substantial investments from private equity firms in the last 7 to 8 years. "Many of these companies are big, mature companies; some will go for M&A, some will go into capital markets," he said.
Risks to the outlook are more in the financial market than the underlying economic fundamentals, he added.
"Markets, valuation shocks, interest rates and macro geopolitics that may sour the overall mood are an issue, and emerging markets tend to be susceptible to these global shocks."
Meanwhile, Singapore may yet be a beneficiary of heightened equity capital market activity in the region.
Tay Hwee Ling, disruptive events advisory leader at Deloitte South-east Asia and Singapore, said companies that may have already done a primary listing domestically may think about crossing borders to expand their business through potential secondary listings.
"While we are facing competition at the moment, in the long run I would see that Singapore is actually still the international hub within the South-east Asia region," she said. "This whole market would complement each other, and we would stand to benefit."
