Deloitte Malaysia's Wong said the local bourse had seen 28 IPOs raising US$715mil in the first 10½ months of this year.
PETALING JAYA: The overall positive business environment in the country is conducive for more initial public offerings (IPOs) heading into 2024, according to Deloitte Malaysia.
The auditing and consultancy firm said the country has a generally healthy gross domestic product growth rate, and coupled with its relatively weak currency, should continue to attract foreign direct investments.
On top of the factors, Deloitte Malaysia disruptive events advisory leader Wong Kar Choon told a virtual media conference yesterday that the realignment of the global supply chain, especially in industries such as the semiconductor sector, are also encouraging reasons for investors to maintain their confidence in the country.
“The unity government is implementing policies and initiatives to assist key industries such as the energy sector, which is backed up by a supportive listing framework by Bursa Malaysia.
“We take comfort that the IPO vibrancy will continue into next year,” he noted.
According to Wong, the local bourse had seen 28 IPOs raising US$715mil in the first 10½ months of this year, which meant that Bursa had performed reasonably, considering its target of 31 listings for the whole of 2023.
While the total IPO funds raised year-to-date is below the US$800.8mil garnered for the whole of 2022, he said the total IPO market capitalisation has touched US$2.77bil, surpassing the US$2.55bil for last year, and more interestingly, the US$1.95bil from the pre-lockdown of 2019.
“The oversubscription rate we have year-to-date is 173.54 times, also outstripping that of 2022, which stood at 132.53 times,” Wong said.
Once more, the ACE Market dominated this year’s IPO with 21 listings, while the improvement in the performance of the Main Market was also encouraging with six listings from five last year.
On the other hand, he said there was a slight dip in listings on the LEAP Market, likely due to companies assessing the LEAP transfer framework before deciding on going public.
“The IPO market remains active, led by quality issuers that sustained or exceeded their market capitalisation upon listing and supported by an active investor participation.
“The listing requirements for the ACE Market are more accommodating towards companies with good growth propositions, and the lower ticket size of IPO shares continues to attract a steady flow of investors,” he said.
Of the 28 listings on Bursa Malaysia yea- to-date, Wong said nine were industrial product companies, while seven were in the consumer sector, raising US$195mil and US$230mil respectively.
At the same time, comparing six countries in South-East Asia, namely Thailand, Singapore, the Philippines, Vietnam, Indonesia and Malaysia, Deloitte South-East Asia (Deloitte SE) outlined that the latter two have managed to raise amounts from their IPOs this year that surpassed the figures of 2019.
It also reported that two Malaysian firms, health food supplement manufacturer DXN Holdings Bhd
and property developer Radium Development Bhd were among the Top 10 IPOs in the region, having raised US$141mil and US$94mil respectively.
It came as no surprise, however, that the IPO scene in 2023 has been dominated by Indonesia, with the nation’s companies all sitting in the top six bracket of the region’s largest IPOs.
Regionally, there were 153 IPOs so far this year having raised US$5.47bil and with a total IPO market capitalisation of US$40.4bil.
On the flipside, despite the strong number of IPOs, Deloitte SE commented that the amount raised was the lowest in eight years, down from US$7.6bil for the whole of last year.
Nevertheless, it said South-East Asian companies are thriving and have the ability to go beyond their shores for crossborder IPOs, driven by expectations of favourable valuations, enhanced liquidity, industry comparability, and investor familiarity with certain sectors.
“Correspondingly, stock exchanges across the globe are paying more attention to South-East Asian companies and are establishing new initiatives or revamping existing ones to improve their appeal as gateways to attract these high-growth businesses,” it said.
Moreover, it observed a trend of an increasing number of companies listing on the secondary boards of South-East Asian bourses, as the lower bourses cater to high-growth, small and medium enterprises, and may be seen as a springboard to the Main Board for some IPO aspirants.
“The listed-company status may propel companies in these categories towards business growth expansion and further fund raising,” it added.
Meanwhile, according to disruptive events advisory leader for Deloitte SE and Singapore Tay Hwee Ling, the challenge of sustaining a vibrant and attractive cash equities market is not unique to the South-East Asian region.
Globally, she said the number of IPOs and IPO proceeds raised had normalised to pre-lockdown levels, underpinned by the trend of companies staying private for longer, and more recently, against the backdrop of a challenging global macroeconomic and interest rate environment. “Companies considering possible public listings have several commercial objectives in mind.
“While the regional bourses can think of innovative ways to attract listing candidates, there are limits to how their measures can directly influence listing decisions.
“Investors will ultimately determine how to allocate their capital based on their strategies and how they view the market.
“Governments recognise the value of an attractive equity market as part of the overall financial services ecosystem and must constantly adapt to the shifts in global capital markets,” she said.
