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A report by Deloitte showed that the initial public offering market in Southeast Asia declined significantly in the first six months of 2024, with market value falling by 71% to $5.8 billion.
The region saw only 67 IPOs in the first half, down 21.2% compared to the same period last year. The amount raised from these IPOs fell 53.3% year-on-year to $1.4 billion.
The January-June period saw no major IPOs, with the exception of one large IPO with a market capitalization of more than $1 billion that raised more than $200 million, according to Deloitte. In the same period last year, there were three large IPOs that each raised more than $600 million.
This represents a continuation of the downward trend that began in the second half of 2022, according to Deloitte data.
The downward trend indicates “weak IPO market sentiment as investors and IPO candidates continue to grapple with macroeconomic factors,” Deloitte said.
However, the report noted that historically, the latter half of the year has “always been the best performing half of 2020-22.”
We expect a large wave of AI IPOs that will tap the IPO capital markets in the coming years, bringing innovation and new opportunities to the market.
“Despite the positive growth outlook and increased FDI in Southeast Asia, ongoing geopolitical instability and a high interest rate environment were significant factors that impacted market conditions and investor sentiment in Southeast Asia,” said Tai Hui Ling, Head of Accounting and Reporting at Deloitte Southeast Asia.
High interest rates could persist into 2024 as governments seek to address inflation concerns, Deloitte analysts have warned.
Against this backdrop, investors have moved towards “proven profitability and sustainable cash flows” rather than the growth-at-all-costs business model that many companies have adopted from 2020 to 2022.
Indonesia IPO Fundraising Drops Sharply
Indonesia, in particular, saw the largest decline among all Southeast Asian countries.
“Indonesia, which topped the 2023 IPO charts (Southeast Asia), saw a significant decline in the first half of 2024, as investors and IPO hopefuls adopted a wait-and-see approach in light of the February 2024 presidential election and anticipation of new economic policies,” said Deloitte analysts.
The market value of listed companies in Indonesia fell 92.2% to $1.22 billion from January to June, while IPO proceeds fell 89.1% to $248 million compared to last year. The number of listed companies in Indonesia in the first six months of this year fell to 25 from 44 in the same period last year — a 43.2% drop.
“While the Southeast Asian IPO market may look subdued in 2024, there is cautious optimism that conditions will improve post-2024,” Tai said.
There are expectations of lower interest rates in the future, which could encourage a return of REIT listings, while AI-related IPOs could hit the market in the near future, as many AI companies are still in the early stages, Tai said.
“We expect a large wave of AI IPOs that will tap the IPO capital markets in the coming years, bringing innovation and new opportunities to the market,” Tai said.
