SINGAPORE (Mar 30): Initial public offering (IPO) activity surged across Southeast Asia in 1Q2020, despite coming close to a standstill in March on the back of the Covid-19 outbreak.
Building on the momentum in 4Q2019, the number of IPO deals in the region in 1Q2020 jumped 63% to 31 deals raising US$3 billion ($4.3 billion) – an 885% surge in proceeds compared to the same quarter a year ago. This is according to EY's latest quarterly IPO report published Monday.
The significant jump in proceeds is mainly due to the listing of Central Retail Corp – the largest IPO ever on the Stock Exchange of Thailand.
During the quarter, there were 18 IPOs in Indonesia, followed by six in Malaysia, five in Singapore, and two in Thailand.
Exchanges in Thailand and Singapore raised US$2.3 billion and US$0.5 billion respectively, placing them among the top 12 exchanges globally by proceeds.
“In the early part of the quarter, IPO activity from 4Q2019 carried over with deals across various markets in Southeast Asia,” says Max Loh, EY Asean IPO Leader.
“This has been somewhat put paid by the Covid-19 pandemic, which has devastated economies, businesses and communities the world over. Economic and fiscal packages are being put together to stabilize economies. These and other effects on market volatility and investor confidence will be the key metrics in determining IPO momentum,” he adds.
Globally, there were 235 IPO deals raising US$28.5 billion in proceeds through the first three months of 2020. This represented an 11% increase in the number of deals and an 89% jump in proceeds, compared to a relatively low base in 1Q2019.
But market watchers say hopes for an IPO window of opportunity and rebound in the first half of 2020 have been cut short by the coronavirus outbreak.
“Riding the strong tailwinds from Q4 2019, the global IPO markets started off strongly in the first two months of 2020. However, the unexpected and novel events surrounding Covid-19 took a toll on the global health of equity markets and, together with other global market factors, have caused market turbulence last seen only during the global financial crisis of 2008,” says Paul Go, EY Global IPO Leader.
“This extreme market volatility makes any ambitions to go public highly uncertain, both in terms of timing and valuation,” he adds.
Given the Covid-19 outbreak and its negative impact on global economic activities, EY believes IPO markets are not expected to quickly rebound in 2Q2020.
However, it says there may be increased IPO activity in 3Q – typically a slower time of the year – as the market attempts a reset and the global pipeline looks for the next IPO window.
