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Southeast Asia’s IPO market shrank significantly in the first six months of 2024, with market capitalization plunging 71% to $5.8 billion. Deloitte report shown.
The region saw just 67 initial public offerings in the first half, with that number down 21.2% compared to the same period a year ago. The amount raised from these IPOs fell 59.4% year over year to $1.38 billion.
There were no blockbuster IPOs from January to June, with only one large IPO with a market value of more than $1 billion and raising more than $200 million, Deloitte said. During the same period a year ago, there were three major IPOs that raised more than $600 million each.
This signals a continued downward trend that began in the second half of 2022, according to Deloitte data.
The downward trend signals “subdued IPO market sentiment where investors and IPO candidates continue to orient to macroeconomic factors,” Deloitte said.
However, the report noted that historically, the second half of the year “has always been the best performing half between 2020 and 2022”.
We expect a significant wave of AI IPOs to tap the IPO capital markets in the coming years, bringing innovation and new opportunities to the market.
“Despite positive growth prospects and an increase in foreign direct investment in Southeast Asia, prolonged geopolitical instability and a high interest rate environment were the major factors affecting market conditions and investor sentiment in Southeast Asia,” Tay said. Hwee Ling, Deloitte South East Asia Accountancy. and reporting assurance leader.
High interest rates may remain in 2024 as governments address inflation concerns, Deloitte analysts have warned.
In this context, investors were oriented towards “proven profitability and sustainable cash flow” instead of the growth-at-all-costs business model adopted by many companies from 2020 to 2022.
Fundraising for IPOs in Indonesia sinks
Indonesia, in particular, saw the steepest decline among all Southeast Asian countries.
The market capitalization of Indonesia’s listings fell 92.2 percent to $1.22 billion from January to June, while IPO proceeds fell 89.1 percent to $248 million from a year ago. The number of imports into Indonesia in the first half of this year fell to 25 from 44 in the same period last year — down 43.2 percent.
“While the Southeast Asian IPO market may look subdued in 2024, there is moderate optimism that conditions will improve after 2024,” said Tay.
Tay said there is a forecast for lower interest rates going forward, which could encourage the REIT’s comeback [real estate investment trusts] listings, while AI-related IPOs could hit the market in the near future, as many AI companies are still in the early stages.
“We anticipate a significant wave of AI IPOs to tap the IPO capital markets in the coming years, bringing innovation and new opportunities to the market,” said Tay.
Clarification: The story was updated after Deloitte clarified that IPO proceeds raised in the first half of 2024 were $1.376 billion, down from $3.392 billion in the first half of 2023, bringing the year-over-year decline to 59.4%.
