Asia News Jul 29

SE Asian IPOs show tentative revival as issuers brave markets

Firms in Malaysia, Thailand and Philippines set for IPOs; number of fund-raisings halve in the year-to-date from last year; Issuers prepare to launch IPOs later this year  

by Reuters
SE Asian IPOs show tentative revival as issuers brave markets
Board members pose for photos as Central Retail Corporation opens trading as Thailand’s largest IPO at the Stock Exchange in Bangkok on February 20, 2020. This gave Central, one of Thailand's largest conglomerates, a market cap of around $8 billion in a punt on a sputtering economy now hit by the coronavirus. Photo: L. Suwanrumpha / AFPm

A handful of companies from the technology and consumer durables sectors are aiming to launch IPOs in Southeast Asia later this year, pointing to an upturn after pandemic-hit markets and weak economic growth slashed fundraising.

In Malaysia, home improvement retailer Mr DIY has re-started the process for its up to $500 million initial public offering (IPO), boosted by a business recovery, sources familiar with the deal said.

The company declined comment and the sources declined to be named due to confidentiality.

Earlier this month, Philippine fibre broadband services provider Converge ICT Solutions filed for an IPO of up to $725 million, cashing in on a surge in home working.

It held up to 50 meetings with investors this month to chart demand for the deal, one source said.

AREIT, Philippines' first real estate investment trust is also raising $275 million.

Activity is picking up in the region after grinding to a halt in the first quarter.

Waiting for right moment

"IPOs which had been planned before the pandemic are just waiting for the right moment to come back," said Tham Tuck Seng, capital markets partner at PwC in Singapore.

"We've seen heightened interest from healthcare issuers to list as the sector has become more important," he said, also highlighting interest from consumer-tech firms.

Total fund raisings from IPOs in Southeast Asia have fallen to $1.4 billion so far this year from $2.9 billion a year ago, Refinitiv data shows. This excludes $3 billion raised by Thailand's Central Retail in February.

The Hong Kong market has started to heat up again with $38 billion raised this year in IPOs and secondary listings, according to Dealogic.

Sources cautioned that a pullback in global markets in recent weeks could still delay listings by Southeast Asian companies, but launches were being readied for later this year.

Markets down

The Philippines' equity index has dropped 25% so far this year, while Indonesia is down 19% and Thailand has lost 15%.

In Thailand, Siam Cement Group's packaging subsidiary is testing investor appetite for its $1 billion IPO, likely in the fourth quarter, which was shelved in March as markets were roiled by the epidemic, sources said. The company did not respond to a Reuters query.

Malaysia's Mr DIY had put its IPO on hold in March just before the country went into a lockdown.

"The push towards the IPO is because the company's business recovery has been so fast," said one source.