SEA hits $12b in IPOs before last stretch of 2018

Vietnam’s IPO capital market was the top performer with $6.2b.

Capital markets across Southeast Asia (SEA) raised $12b in 10 months of 2018 across 135 initial public offerings (IPOs), according to professional services firm Deloitte.

The top three listings in SEA came from Vietnam and Thailand, with Vinhomes Joint Stock Company taking the top spot with $3.6b raised. It was followed by Thailand Future Fund which raised $1.8b and Vietnam Technological and Commercial Joint Stock Bank which raised $1.2b.

Vietnam’s IPO capital market raised a total of $6.2b as of 15 November which far exceeds the funds raised in the past year, the firm noted. The increase was due to the Vietnam government’s privatisation drive and market reforms, strong interest from foreign investors and local funds, as well as a high gross domestic product (GDP) growth of 6.8% in 2018.

“With the Vietnam Finance Ministry proposing to remove the 49% foreign ownership cap for listed companies, and the stock exchange streamlining the listing and IPO process, we can expect the Vietnam IPO market to continue to do well in the next few years,” Tay Hwee Ling, global IFRS & offerings leader at Deloitte Southeast Asia and Singapore, said in a statement.

Meanwhile, the most popular exchange outside of the region was Hong Kong, where $3.2b was raised by SEA companies over the last five years, Deloitte noted.

However, the firm noted how the average cross-border IPO funds raised in 2018 is lower than the average funds raised by companies in their domestic exchanges within Southeast Asia.

In Singapore, the average funds raised by Singapore companies listed in Hong Kong was $18m per IPO, whilst the average funds raised by Singapore companies listed on the Singapore Exchange (SGX) was $30m per IPO.

“Traditionally, companies tend to list in the countries where they do their business in, which is typically their home country where they have established their brand locally,” Tay explained in the report. “However, the tide appears to be shifting, and companies are looking for opportunities in overseas exchanges.”

In the past five years from 2014 to 2018, SEA companies raised a total of $3.6b on overseas exchanges, which Deloitte said is an indication that companies in the region are open to exploring options outside their respective countries to raise funds.