KUALA LUMPUR: Malaysia has emerged as one of the new initial public offering (IPO) hotspot markets in ASEAN in 2023.
According to Ernst & Young (EY) Global IPO Trends 2023 report, Malaysia notched increases in deal volume and value against five-year average IPO activity.
Malaysia witnessed a notable increase in IPO numbers, surpassing the 5-year average by 21 per cent, accompanied by a 25 per cent rise in IPO proceeds compared with the 5-year average.
The stock exchange's market capitalisation also reached US$357 million as of October 2023.
EY Global said this was amid a mixed picture in ASEAN's IPO market.
While the number of completed deals rose slightly year-on-year (YOY), most of these came from Indonesia, Thailand and Malaysia, which together accounted for 148 of the total of 157.
Malaysia accounted for 20 per cent of total transactions, Indonesia 50 per cent of deals and 64 per cent of proceeds, followed by Thailand with 24 per cent and 19 per cent by volume and value, respectively.
Inflation and elevated interest rates have reduced IPO activity in Singapore, with candidates deterred by low pricing and weak postlisting performance.
EY Global said there is some hope that companies in new growth sectors of environment, social and governance and technology may boost the market by going public in 2024 as long as healthy trading prices can be maintained.
• In a region characterised by developing economies, IPO proceeds are typically smaller, as they tend to involve growing companies eager to access funds for expansion," EY Global said in its report.
2023 was a challenging year for the Asia-Pacific's IPO market, with the two powerhouses of Mainland China and Hong Kong continuing to decline in volume and value.
In 2023, 732 companies went public in Asia-Pacific raising US$69.4 billion, a year-on-year fall of 18 per cent and 44 per cent respectively.
Looking ahead however, EY Global believes IPO activity in Asia Pacific is expected to gather pace as the year progresses so long as there is an alignment of conducive monetary policymaking, China's economic recovery and eased geopolitics.
"Wellcapitalised companies in the environment, social and governance (ESG) and technology spaces have the capital to wait out until valuations improves. Realistic pricing and post-IPO performance may encourage some of these companies to list, but only if they are prepared for IPO with strong governance and a good equity story.
The performance of such companies post-IPO will be monitored closely, and if positive, may encourage new listings," EY Global IPO Trends report 2023 said.