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Southeast Asia’s IPO market an investor favorite amid global headwinds: Deloitte

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JAKARTA, INDONESIA – JANUARY 2: Citizens are seen crossing the street during rush hour in Jakarta, Indonesia on January 2, 2023.

Firdaus Wajidi | Anadolu Agency | Getty Images

Southeast Asia’s initial public offering market is showing promising signs despite a global IPO slowdown in the first half of 2023, according to a new Deloitte report.

In the last six months, Southeast Asia’s market saw 85 IPOs raising $3.3 billion in proceeds, versus the 73 IPOs in the same period last year which raised $3.1 billion. That’s a 16% increase in the number of IPOs and a 5% increase in proceeds for the first half of 2023.

“Southeast Asia’s positive growth outlook is making the region an investor favourite as there continues to be an influx of foreign direct investment due to the region reopening its doors, the restoration of the tourism industry, and the booming domestic demand,” the report said.

“Together, these factors have contributed to the positive economic growth in the region despite the global economic uncertainties.”

There remains a sea of exciting opportunities in the regional capital markets and a healthy deal flow for investors to explore and tap on.

The uplift was largely attributed to three IPOs in Indonesia that raised more than $500 million each, as compared with only one blockbuster IPO — GoTo, the merged entity of Gojek and Tokopedia — at $1 billion in the same period last year.

Meanwhile, the tech-heavy Nasdaq stateside has yet to see a notable venture-backed tech IPO since software vendor HashiCorp’s December 2021 debut.

There is a global IPO slowdown that persisted through the first half of 2023, with 5% fewer IPOs as compared to the same time last year, an EY report revealed. Proceeds plunged 36% year-on-year.

Indonesia’s rising star

Indonesia raised 70% of the total IPO proceeds in Southeast Asia for the first half of 2023.

The IPO market of the world’s fourth most populated nation was highlighted by three listings: nickel company PT Trimegah Bangun Persada Tbk, minerals and EV battery materials firm PT Merdeka Battery Materials Tbk and geothermal power plant operator PT Pertamina Geothermal Energy Tbk.

Indonesia’s President Joko Widodo has introduced measures to position the country as a global electric vehicle supply chain hub, including signing deals with Australia to collaborate on key EV production minerals lithium and nickel.

It still remains to be seen how Southeast Asia will ride out the storm in its economic recovery.

“Indonesia holds the world’s largest nickel reserves and the recent IPO of Harita Nickel (PT Trimegah Bangun Persada Tbk) is good gauge of the interest of both local and international investors,” said Deloitte.

Indonesia “looks set to have its best year ever in terms of listing proceeds with 44 IPOs in 2023 H1,” said Deloitte.

Thailand and Malaysia follow with 18 and 16 listings, respectively, in the first half of 2023.

“With each country’s pro-growth policies, stable macroeconomics and healthy demographics of Southeast Asia, coupled with the growing impact of tech-enabled entrepreneurs on investment, and strong trading relationships with China, there remains a sea of exciting opportunities in the regional capital markets and a healthy deal flow for investors to explore and tap on,” said Deloitte.

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Deloitte said, however, that it remains “cautiously optimistic about the region’s prospects” in the second half of the year.

“It still remains to be seen how Southeast Asia will ride out the storm in its economic recovery,” said Deloitte. The firm said uncertainties such as interest rate hikes, troubles in the banking sector as well as inflation continue to rock the economy.

The International Monetary Fund expects Southeast Asia’s growth to slow from 5.7% in 2022 to 4.6% in 2023. The organization cited a slight moderation in domestic demand for Malaysia and Thailand, prices of commodities easing in Indonesia and Malaysia as well as weaker external demand from U.S. and Europe.

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