Malaysia, Indonesia to battle for IPO supremacy in 2025 as signs point to Asean market comeback

INDONESIA and Malaysia are likely to jostle for the top spot on the Asean initial public offering (IPO) leaderboard in 2025, as the former returns to political stability following a general election.

This comes after Malaysia emerged as this year’s winner in terms of deal number and size, on the back of positive economic indicators and robust investor support.

Industry observers said Asean’s IPO market as a whole is expected to improve amid lower interest rates and positive growth in its economies.

As at Dec 18, the region’s largest markets – Indonesia, Malaysia, the Philippines, Singapore and Thailand – raised a total of US$3.6 billion in 148 new listings, based on Bloomberg data.

This amount falls short of the US$5.9 billion the five countries raised in 171 IPOs in 2023.

Market watchers said high interest rates in the earlier quarters of 2024 slowed IPO activity.

Tan Mui Hui, deputy head of capital markets at law firm Rajah & Tann, said: “High rates in the (first) three quarters of 2024 constrained corporate borrowing, dampening IPO activity as companies opted to postpone listings.”

Rick Chan, Singapore managing partner and Asia-Pacific head of audit and assurance at professional services firm Forvis Mazars, added that total IPO proceeds declined in the region due to the heightened rate environment, rising inflation and geopolitical uncertainty.

“(This) dampened investor sentiment and led to a more cautious approach going public,” he said.

Martin Siah, Singapore country executive and South-east Asia head of global corporate and investment banking at Bank of America (BOA), noted that general elections in “historically high IPO volume markets” such as Thailand and Indonesia were also a factor.

Indonesia v Malaysia

Indonesia, in particular, was affected by markets “taking a pause” during the general election, he said.

This, along with market volatility and economic headwinds, contributed to Indonesia’s lower IPO activity in 2024. Bloomberg data showed that US$645.1 million was raised on the Indonesian bourse through 40 new listings as at Dec 18, a decline from 2023’s US$3.6 billion in 79 IPOs.

Forvis Mazars’ Chan said: “Indonesia’s earlier success was fuelled by strong tech IPO activity, but sustaining this momentum proved challenging in 2024, as global financial conditions tightened and investors became more selective.”

In comparison, Malaysia had a bumper year, with US$1.6 billion raised from 51 IPOs. This is higher than the US$914.8 million in 37 new listings in 2023, Bloomberg data showed.

Bursa Malaysia also logged another four listings on its Leading Entrepreneur Accelerator Platform, which allows small and medium-sized enterprises to tap the capital market for funding.

Chan noted that Malaysia was able to weather the broader downturn in the region’s IPO market due to its sectoral diversity and “supportive regulatory environment”.

This is as the Malaysian bourse had “an ecosystem of investors, including government agencies, that facilitated the performance of the shares of the companies after” listing, he said.

Robson Lee, partner at Kennedys Legal Solutions, said: “The political stability under the current Malaysian government, supported by active foreign investors, has been a tremendous boost to Bursa Malaysia.”

BOA’s Siah also noted that Malaysia accounted for about half of the Asean equities capital markets issuance size, compared to a historical share of 20 per cent.

“The volume is driven by two key segments – large IPOs of national champions and active secondary blocks business, as well as a long list (albeit smaller sizes) of local pension and sovereign wealth fund monetisations,” he said.

One listing this year that stood out was that of mini-mart chain 99 Speed Mart Retail, which raised nearly RM2.4 billion (S$721.7 million) and valued the company at RM16 billion. The Business Times previously reported that this was Malaysia’s largest IPO since Lotte Chemical Titan’s debut in 2017.

Who comes out on top?

While Malaysia has cemented its position at the top, 2025 could be a different story, said some observers.

Lee of Kennedys believes that with the election of Indonesia’s new president Prabowo Subianto, the political uncertainty in the country will dissipate.

“Indonesia is likely to win back the No 1 IPO spot in the coming year, given its vastly larger resources and critical mass of investors vis-a-vis Malaysia,” he said.

Jasmin Maranan, capital markets adviser at Deloitte Indonesia, believes economic prospects and domestic growth remain positive, even as the local market awaits clarity on the new government’s fiscal and monetary policies.

“In addition, capital market regulators are taking critical steps to further enhance market appeal and liquidity with (the) hope of boosting listings in 2025,” she said.

EY IPO leader Chan Yew Kiang said recent investments in the telecommunications and electric vehicle industries in Indonesia will also enable IPO activity to pick up “in the near future”.

Meanwhile, Forvis Mazars’ Chan believes Malaysia will keep its lead in 2025, due to its strong regulatory framework, investor demand and sectoral diversity.

Wong Kar Choon, transactions accounting support partner at Deloitte Malaysia, said: “With the heightened interest in IPOs (from) both companies and investors, as well as the impressive valuations being achieved in Malaysia, there is huge potential for Bursa Malaysia to become an attractive listing destination for regional companies.”

Thailand in third place

Observers are also positive on the listing pipeline of Thailand, which was the third-most active market in South-east Asia.

Thai listings have raised US$762.5 million from 31 IPOs so far this year, Bloomberg data showed. In 2023, Thai companies raised US$1.3 billion from 40 IPOs.

Wilasinee Krishnamra, transactions accounting support partner at Deloitte Thailand, noted that Thailand’s stock market landscape and IPO listings in 2024 “reflect a combination of economic recovery and moderate growth”.

“The regulator has also introduced initiatives to enhance market transparency and support new and growing businesses, including small and medium enterprises, further stimulating fundraising activities,” she said.

Said Forvis Mazars’ Chan: “Thailand is also likely to perform well, with its tourism-driven recovery and consumer-driven growth sectors expected to attract IPO candidates.”

As a whole, Asean’s IPO market is poised to stage a comeback, on the back of easing financial conditions, he added.

“By focusing on emerging trends – such as sustainability, technological innovation, and consumer-driven industries – and implementing targeted reforms, Asean exchanges have the potential to unlock significant IPO activity and solidify their place as dynamic players in the global capital market,” he said.

Kennedys’ Lee said: “My view is that the Malaysian, Indonesian and Thai economies are the new Asean dragons (that will) make waves in the 2025 IPO market.

“These countries have the resources, (and) a group of new wealthy investors – both foreign and local – who will channel their monies to the bourses of these countries to catch the... wave of growth and prosperity.”