SEA’s IPO market fares relatively well amid global downturn: EY report

While IPOs worldwide mostly underperformed, those in Southeast Asia fared relatively better in 2022 in terms of the number of deals, a report from Ernst & Young (EY) shows.

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There were 137 IPOs that raised US$6.5 billion in the region in 2022, compared to 134 at US$13.2 billion in 2021, the report says. Indonesia led with 60 listings that raked in US$2.2 billion, followed by Thailand, Malaysia, the Philippines, and Singapore.

Globally, the market took a sharp turn south from 2021, with only 1,333 public offerings that amounted to US$179.5 billion last year. This dipped by 45% and 61% by the number of deals and proceeds, respectively.

The report attributes this to increased market volatility and other unfavorable market conditions, along with the dismal performance of many IPOs since 2021.

See also: Tech in Asia Explains: Why IPOs flop

Public offerings in the Americas, most of which were on US exchanges, hit a 13-year low by volume and a 20-year low by value, plummeting by 76% and 95%, respectively. This had not happened since the peak of the Great Recession, the report notes.

Asia Pacific took the smallest hit, accounting for 63% of deals and 67% of funds raised globally in 2022.

Nevertheless, the number of global IPO deals jumped by 16% from the pre-pandemic year of 2019.

EY says there is “a strong IPO pipeline” for 2023, although activity will likely remain somber through at least the first quarter before regaining greater momentum by the second half of the year.

Larger IPOs in Southeast Asia were limited in 2022, but they may return in 2023 with reduced Covid-19 restrictions.

“Amid an environment defined by higher inflation and rising interest rates, investors have spurned new public companies and turned to less risky asset classes,” the report notes.