Apac IPOs most resilient in 2022; tech and energy groups lead large issuances: EY
Yong Hui Ting
THE initial public offering (IPO) market in Asia-Pacific (Apac) has been the most resilient compared with other regions, with stronger and higher growth potentials, according to an EY report on Thursday (Jan 5).
This comes as the region registered the lowest decline in both IPO volume and proceeds out of the world’s largest markets, including the Americas, Europe, the Middle East, India and Africa (EMEIA). It also accounted for 67 per cent of the total global IPO proceeds.
As a whole, the Apac IPO market fell 26 per cent and 31 per cent in IPO volume and size, respectively. The global average decline for IPO volume and size last year was 50 per cent and 73 per cent, respectively.
In South-east Asia, there were a total of 137 IPOs raising US$6.5 billion in 2022, compared with 134 IPOs raising US$13.2 billion in 2021. Indonesia led the race with the highest volume of listings in the region, followed by Thailand, Malaysia and the Philippines. Singapore came in among the last with just eight IPOs recorded in 2022, with a total of US$40 million gathered.
Interestingly, some of the largest IPO issuances last year were led by companies in the technology and energy segments.
Energy IPOs were driven largely by companies in renewable energy generation, electric vehicles and green hydrogen, which deployed the listing as a means to raise funds for expansion, said researchers.
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However, the boom for tech listings is unlikely to continue into 2023, given that the valuation of listed technology companies has been discounted in recent months, they added. Chinese electric vehicle startup Nio is among those that led large IPO issuances.
The Asean market in particular, is expected to face headwinds with global inflation and an increasing interest rate environment, said the researchers, though they think the volume of larger IPOs could rise this year on the back of reduced Covid-19 restrictions in most countries in the region.
For the IPO market to come alive again, EY believes some conditions need to be met, including: positive sentiment and an uptick in stock market performance; lower inflation and the end of interest rate hikes; easing of geopolitical tension; and diminished pandemic effects on the global economy.
“With tightening market liquidity, investors are more risk averse and will favour companies that can demonstrate resilient business models in profitability and cash flows, while clearly articulating their ESG (environmental, social and governance) agendas,” said Paul Go, EY Global IPO leader.
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