“The bulk of the prospects, however, will likely be small and medium enterprises seeking a listing on the ACE Market of Bursa Malaysia, helped by ample liquidity in the market," Deloitte's Wong said.
KUALA LUMPUR: The initial public offering (IPO) capital market in Malaysia is expected to remain healthy in 2025 with at least over 30 issues in the pipeline and more likely to come.
The year till mid-November saw a record 46 IPOs on Bursa Malaysia, which collectively raised some RM6.75bil (US$1.5bil) from investors, making Malaysia the most vibrant IPO market in Asean, according to Deloitte.
The listing added some RM30bil (US$6.6bil) in market capitalisation, helped by an improvement in investor sentiment and liquidity on the back of good economic growth and policies, as well as the listing ecosystem.
More listings are anticipated, including some big-ticket names that have been highlighted in news reports, the leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services firm stated.
“The bulk of the prospects, however, will likely be small and medium enterprises seeking a listing on the ACE Market of Bursa Malaysia, helped by ample liquidity in the market.
“The listings on the ACE Market are easier and the market platform is sponsor-driven, usually by an investment bank.
“Although the ACE Market does not require a company to have a profit track record, they need to sell the growth story. Of course if the company is profitable, it’s much easier for its investment bank and principal adviser to sell.
“Second, the good IPO valuations in the local market make it attractive for the promoters to list and encourage retail investor participation,” said Wong Kar Choon, transaction advisory services, audit and assurance partner, at Deloitte’s Insights: SEA IPO Press Conference 2024 here yesterday.
There were 32 IPOs on Bursa Malaysia in 2023 which raised RM3.6bil (US$0.8bil) in proceeds. Till mid-November of this year, there were 34 IPOs on the ACE Market, 10 on the Main Market and two on the LEAP Market.
The notable names were 99 Speed Mart Retail Holdings Bhd, Johor Plantations Group Bhd, Alpha IVF Group Bhd and Prolintas Infra Business Trust.
The bulk of the 46 listings so far have been from the consumer (16 IPOs) and industrial products (17) sectors, but there were also four from the energy and resources sector.
“One of the key reasons is because these sectors are very familiar to investors. The four energy and resources sector listings, if you were to drill down the energy and resources sector, were companies in the plantation sector as well as the oil and gas sectors.
“A lot of the companies are capitalising on the positive economic conditions to go for an IPO, to raise funds, to build the company,” Wong said.
While a majority of listings will be ACE Market candidates, big ticket names like U Mobile Sdn Bhd, MMC Ports Holdings Sdn Bhd, Gentari Sdn Bhd and Loob Holdings Sdn Bhd have been mentioned in news reports looking at a potential IPO on the local exchange.
Wong said Sarawak-based businesses could be another source of IPOs as the state embarks on its energy-driven economic development trajectory.
Deloitte noted that for the 10.5 months of 2024, the IPO capital markets in Asean saw 122 IPOs listings, raising US$3bil. While the number was high, the total capital raised was the lowest in nine years and a decline from the US$5.8bil raised across 163 IPOs in 2023.
The region saw only one IPO that raised over US$500mil, in contrast to four such listings in 2023, Deloitte revealed.
In terms of industries, the consumer and energy and resources segment are the top two dominating the region, accounting for 52% of the total number of IPOs and 64% of the total IPO funds raised.
The advisory firm noted the consumer industry in the region is undergoing significant transformation due to a shift in consumer behaviour, which has led to heightened competition across local, regional and global players.
“This change is driven by the region’s growing gross domestic product, which has led to an expanding and increasingly affluent middle-class with greater spending power.
“As income levels rise, these consumers are in a better position to make more discerning choices, opt for premium products and seek novel experiences,” Deloitte stated in a release.
The energy and resources industry, specifically the renewable energy sector in the region, continues to be a focal point as the region grapples with the trilemma of ensuring energy security, equity and environmental sustainability as it transitions towards more sustainable resources while balancing the need to meet rising energy demands.
“South-East Asia’s IPO market encountered significant challenges in 2024, including currency fluctuations, regulatory differences across markets, and geopolitical tensions, which affected trade and investment,” said Tay Hwee Ling, accounting and reporting assurance leader for Deloitte South-East Asia.
Tay added that high interest rates across Asean economies further constrained corporate borrowing, dampening IPO activity as companies opted to delay public listings.
“Additionally, market volatility among major trade partners impacted investor confidence, while varied regulatory requirements across Asean countries created complexities for companies seeking cross-border listings.”
