Funds raised through IPOs in Southeast Asia plunged over 60% in the second half of 2023 from the same period the year before, with companies shying away from listing due to factors such as domestic elections and uncertainty over China’s faltering economy.
Data on IPOs in Southeast Asia analyzed by Nikkei in cooperation with US research firm Dealogic showed that a total of USD 1.6 billion was raised in the second half of last year, down 63% from the corresponding time in 2022. The number of IPOs dropped 21% to 71.
Thailand logged the biggest fundraising decline in the region, plummeting 75% to USD 773 million. “There was no big size company to get into the market, especially in the second half year. That is … a result of delaying in set up the government [following a general election in May 2023], which led investors losing confidence,” said Natthapol, an analyst at the Thai unit of Yuanta Securities. The number of IPOs “will depend on the economic situation. If the economy is good, there will be more IPOs in 2024,” he said.
Thailand is not the only country in the region where politics has been affecting plans to go public.
A strong “wait-and-see” mood has taken hold among businesses in Indonesia ahead of the nation’s presidential election in February, with the number of IPOs in July–December dropping to 31 from 42. The Indonesia Stock Exchange (IDX) expects just over 60 companies to go public in 2024, down from 79 in the whole of 2023. That comes as investors are set to stay on the sidelines until they get some clarity on the next administration’s economic policy.
China’s slowdown has also been casting a long shadow, with the world’s second largest economy a big influence on Southeast Asia, especially for the region’s exporters.
Siam Cement Group (SCG), a leading materials conglomerate in Thailand, is holding off on an IPO for its major chemicals subsidiary until further down the road. The offering, slated to raise THB 38.5 billion (USD 1.08 billion) in one of the country’s largest ever listings, was originally planned for 2022, but has been delayed in the face of global economic headwinds. CEO Thammasak Sethaudom has said that more time is needed for the move as it would be unprofitable in the current environment.
However, companies related to renewable energy continued carrying out IPOs in the second half of 2023 amid hopes for growth amid steps such as Southeast Asian nations adopting decarbonization targets.
Consumer businesses also willingly raised funds against the backdrop of increased private spending in the wake of the Covid-19 pandemic.
Indonesia’s Barito Renewables Energy achieved the biggest IPO during the period. Under the umbrella of Barito Pacific, a major business conglomerate in Indonesia, the company raised around USD 200 million by selling 3% of its outstanding shares.
Barito Renewables operates three geothermal power plants with a combined output of 890,000 kilowatts on the island of Java. The company has also decided to purchase a wind farm on Sulawesi island. With a capacity of 75,000 kilowatts, the site is one of the largest wind power stations in Indonesia.
Barito Renewables has also drawn attention due to a steep rise in its stock price amid hopes for the company’s growth. Its market capitalization was IDR 130 trillion (USD 8.23 billion) on the day of its listing, but had soared more than fivefold to IDR 672 trillion (USD 42.5 billion), the third largest on the IDX, as of January 29.
Nusantara Sejahtera Raya, a top movie theater operator in Indonesia, racked up the second largest fundraising. Running more than 200 cinemas across the country at the moment, it aims to use capital raised from the listing to boost the number of screens it has by 60% to 2,000 within a few years.
Thailand was the biggest fundraiser by country, with six of its companies in the top 10 list.
SCG Decor, a major SGC subsidiary producing tiles and bathroom fittings, raised USD 145 million via its IPO, the largest among Thai companies. As Thailand’s population is aging and is not expected to increase sharply, SCG Decor plans to use the funds to expand into neighboring countries such as Indonesia and Vietnam.
Elsewhere in Thailand, aviation-related firms pushed ahead with IPOs. Those included Asia Network International, a general sales agent for airlines, while Samart Corp., an information technology and communication company, listed its Samart Aviation Solutions subsidiary, which provides aviation technology in Cambodia.
In Malaysia, which ranked third in terms of both value and number of IPOs, precision instrument maker CPE Technology and 14 other companies went public. “A formidable IPO pipeline is expected in 2024, buoyed by a healthy institutional and retail appetite, especially for consumer and tech or tech-related industries,” said Wong Kar Choon, audit partner at Deloitte Malaysia.
Some analysts forecast that the IPO space would improve in 2024 as the global round of interest rate hikes, blamed for falls in emerging companies’ stock prices, runs its course. PwC said in a report earlier this year that Southeast Asian IPO markets would “grow and rebound” in 2024, if “the overall macroeconomics stabilize, in particular the interest rate environment.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.