Vietnam ranks top in total funds raised via IPOs across S-E Asia

Singapore

DESPITE fewer flotations, capital markets across South-east Asia raised S$12 billion in total funds via 135 initial public offerings (IPOs) in the first 101/2 months of this year, just shy of the S$13.5 billion raised through 178 IPOs in the whole of 2017.

This is due to a large boost from Vietnam and Thailand, which respectively accounted for 52 per cent and 26 per cent of total funds raised.

Vietnam posted a contribution of S$6.2 billion, lifted by its hosting of two of the top three blockbuster listings: Vinhomes Joint Stock Company took the top spot with S$3.6 billion raised while Vietnam Technological and Commercial Joint Stock Bank pulled into third place with S$1.2 billion raised.

The second largest flotation went to Thailand Future Fund, which raised S$1.8 billion. Thailand raised a total of S$3.2 billion in 2018 compared with S$4 billion for the whole of 2017.

Together, these three blockbuster IPOs raised a total of S$6.7 billion, accouting for 56 per cent of total funds raised by all South-east Asian IPOs in 2018.

Vietnam's huge raises are in large part due to its government's privatisation drive and market reforms including the proposed removal of the 49 per cent foreign ownership cap and the streamlining of its IPO and listing processes.

To put the $6.2 billion figure in perspective, Vietnam raised S$419 million in 2017 and S$266 million in 2016. Tay Hwee Ling, Global IFRS and Offerings Services Leader at Deloitte Southeast Asia and Singapore, also pointed out that Vietnam had managed to net prominent foreign investors, including GIC, Fidelity and Capital Asset Management, which further inspire confidence in future investors.

"So both the domestic changes coming up and the external factors seem to suggest the foreign funds, in the near term, will continue to flow into Vietnam," said Ms Tay. "We will still see a high level of activity in the next one year to 18 months."

On the local front, Singapore saw 13 listings as at Nov 15; the total amount of funds raised was S$715 million, an 86 per cent drop from 2017's full year figure of S$4.7 billion.

While it represents a significant slowdown, it is worth noting that 2017 was a bumper year for Singapore. It is also not the lowest figure posted - in 2015, Singapore IPOs raised S$512 million. The increased activity in the region is also a positive sign, said Ms Tay.

"Capital markets are fluid. If we have sufficient liquidity and sufficient capital markets that are performing actively, it will bring up the overall activity in the South-east Asia IPO market ... It's a good sign for the businesses in the region because it provides them with a lot more choice," she said.

Indeed, companies in the region are increasingly exploring overseas listings. Between 2014 and 2018, companies raised a total of S$3.6 billion on overseas exchanges.

The most popular exchange outside of the region is Hong Kong, where S$3.2 billion was raised over the past five years. However, the average cross-border IPO funds raised in 2018 is lower than the average funds raised by companies in their domestic exchanges.

In the case of Singapore, the average funds raised by Singapore companies listed in Hong Kong was S$18 million per IPO, while the average funds raised by Singapore companies listed on the SGX was S$30 million.

It is also worth noting that the average amount raised by Singapore companies on the SGX in 2017 was S$21 million, just two thirds the average raised this year.

In addition to having higher funds raised, Singapore companies that listed on the SGX had higher profitability. Companies that listed in Singapore this year posted an average profit after tax of S$9.3 million versus those that listed in Hong Kong which posted an average profit after tax of S$3.9 million.

Looking at 2018, Ms Tay expressed cautious optimism for local capital markets.

"Depending on the stability of the global economy, we can expect the IPOs that have been delayed in 2018 to seek listing in the first quarter of 2019, and potentially some IPOs from the Reits and the healthcare and F&B sectors," she said.

"2019 will see increased vibrancy in the markets when some of SGX's initiatives in 2018 come to fruition, including the anticipation of the first dual-class share listing since the announcement earlier this year."