Malaysia’s IPO market sizzles, but tech firms listing may fizzle

On September 9, Malaysian grocery chain 99 Speed Mart listed on the Bursa Malaysia, making it the country’s largest initial public offering (IPO) in seven years.

With the listing, the grocery chain raised US$531 million, and its debut that day made owner Lee Thiam Wah Malaysia’s latest billionaire. Now, Lee’s net worth is estimated at US$3.3 billion, according to the Bloomberg Billionaires Index.

Inside the Bursa Malaysia headquarters. /Photo credit: Bursa Malaysia

There’s hopes that another listing would follow suit and match the 99 Speed Mart hype. Names being bandied about include U Mobile, whose owner Vincent Tan floated the idea of an IPO in a July interview with Bloomberg.

But traditional Malaysian companies aren’t the only ones reported to be eyeing an IPO on the Bursa. The country’s first unicorn, Carsome, is said to be considering going public on the Malaysian stock exchange.

Coffee chain Zus Coffee, which recently raised a pre-IPO round, is also reportedly eyeing a listing down the line.

The Malaysian bourse currently has 34 IPOs and is expecting to end the year with 42 listings.

Companies listed on the Singapore stock exchange seem to be eyeing an IPO on the Bursa Malaysia as well. Singapore-based manufacturing firm Grand Venture Technology said in a bourse filing that it is in discussions for a potential secondary listing of its shares on the Main Market of the Malaysian exchange.

So why has the Bursa recently become favorable ground for tech startups to IPO? And is the hype justified?

Favorable macroeconomic conditions

A number of factors are making Bursa Malaysia an attractive listing destination. For starters, there has been a steady increase in foreign funds buying Malaysian equity.

Foreign investors bought 217.6 million ringgit (US$50 million) last week, resulting in the fifth straight week of net buying, state-owned investment bank Malaysian Industrial Development Finance (MIDF) wrote in a September 13 note.

Among the reasons for this was an anticipation of the US Federal Reserve’s pivot to cut interest rates this week. This led money managers to look toward Southeast Asia for higher returns on investments. The Fed did cut rates on Thursday by 50 basis points (0.50%).

Aside from Malaysia, countries like Indonesia, Thailand, and the Philippines have seen consecutive net foreign inflows into their respective stock markets, according to MIDF.

Local taste

Lack of sophisticated investors for tech