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Southeast Asia’s IPO market declined considerably within the first six months of 2024, with market capitalization plunging 71% to $5.8 billion, a report from Deloitte confirmed.
The area noticed solely 67 preliminary public choices within the first half, with that quantity falling by 21.2% in comparison with the identical interval a 12 months in the past. The quantity raised from these IPOs dropped 59.4% 12 months on 12 months to $1.38 billion.
There have been no blockbuster IPOs from January to June, with just one giant IPO with market capitalization of greater than $1 billion and elevating greater than $200 million, Deloitte stated. In the identical interval a 12 months in the past, there have been three giant IPOs which raised greater than $600 million every.
This marks a continued downward development that started within the second half of 2022, in keeping with Deloitte information.
The downward development indicators “subdued IPO market sentiments the place traders and IPO candidates proceed to navigate macroeconomic components,” Deloitte stated.
Nonetheless, the report identified that traditionally, the latter half of the 12 months “has all the time been the higher performing half between 2020 to 2022.”
We anticipate a big wave of AI IPOs tapping on the IPO capital markets within the coming years, bringing innovation and new alternatives to the market.
“Regardless of a optimistic progress outlook and growing overseas direct funding in Southeast Asia, the extended geopolitical instability and excessive rates of interest atmosphere have been the numerous components affecting the market situations and investor sentiments in Southeast Asia,” stated Tay Hwee Ling, Deloitte’s Southeast Asia accounting and reporting assurance chief.
Excessive rates of interest might persist in 2024 as governments handle inflation issues, Deloitte analysts warned.
In opposition to this backdrop, traders geared towards “confirmed profitability and sustainable money flows” as an alternative of the growth-at-all-cost enterprise mannequin that many corporations adopted from 2020 to 2022.
IPO fundraising in Indonesia plunges
Indonesia, particularly, noticed essentially the most pronounced drop amongst all of the Southeast Asian nations.
“Indonesia, which topped the 2023 [Southeast Asia] IPO charts, skilled a big decline within the first half of 2024, as traders and IPO aspirants adopted a wait-and-see strategy in gentle of the presidential elections in February 2024 and in anticipation of recent financial insurance policies,” Deloitte’s analysts stated.
Market capitalization of Indonesian listings plunged 92.2% to $1.22 billion from January to June whereas IPO proceeds raised fell 89.1% to $248 million in comparison with a 12 months in the past. The variety of Indonesian listings within the first six months of this 12 months fell to 25 from 44 in the identical interval final 12 months — down 43.2%.
“Whereas Southeast Asia’s IPO market might seem subdued in 2024, there may be cautious optimism that situations will enhance past 2024,” stated Tay.
Tay stated there may be anticipation of decrease rates of interest forward which might encourage the return of REIT [real estate investment trusts] listings, whereas synthetic intelligence-related IPOs might hit the market within the close to future as many AI corporations are nonetheless within the early phases.
“We anticipate a big wave of AI IPOs tapping on the IPO capital markets within the coming years, bringing innovation and new alternatives to the market,” Tay stated.
Clarification: The story has been up to date after Deloitte clarified that the IPO proceeds raised within the first half of 2024 was $1.376 billion, in comparison with $3.392 billion within the first half of 2023, bringing the year-on-year decline to 59.4%.
