SEA remains bright spot amid global IPO downturn in Q1

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The global IPO market is off to a bad start in 2023, with the first quarter of the year seeing only 299 IPOs raising US$21.5 billion, a report by Ernst & Young found. This represents an 8% decrease in the number of IPOs and a 61% drop in amount raised, year over year.

EY’s Global IPO Trends report for the first quarter of the year found that the number of IPOs in the Asia Pacific declined 6% while proceeds plummeted 70% from a year ago.

However, Southeast Asia remained a bright spot as IPO activity appeared encouraging. Indonesia was the most active country in Q1, seeing 30 IPOs that raised US$828 million.

The report tied the decrease in IPO activity to factors such as rising interest rates, a lukewarm stock market, entrenched inflation, and turbulence in the global banking industry.

Tech firms, which have been a mainstay of IPO activity in recent years, also saw a sharp downturn in valuations. The turmoil in crypto markets and the global banking industry has also weighed the market down. The volume of listings through special purpose acquisition companies also hit a six-year low, the report noted.

Some firms that went public via the SPAC route last year include Singapore’s AUM Biosciences and India’s Zoomcar. However, Indonesia’s FinAccel and Singapore’s Carousell have dropped plans to list via mergers with blank-check firms.

See also: Mapping public tech companies in Indonesia

However, despite these challenges, the IPO pipeline continues to grow and there is hope for a recovery later this year if inflation peaks, energy prices soften, and Mainland China’s economy rebounds, the report found.

Collaboration between governments and investor appetite for diversity could lead to a wave of dual listings and cross-border deals this year, EY said in the report.