The initial public offering (IPO) market showed tremendous results in Southeast Asia (SEA) in calendar year 2021. Oil and gas, food and diversified financial services were the three major sectors that raised funds through IPOs in SEA. In 2021, SEA countries raised more than $13 billion through IPOs, raising 40 per cent more than in calendar year 2020. The market for 2021 closed with an IPO capitalisation of more than $50 billion. The activity grew even after the region battled the second phase of Covid-19. Infrastructure building is at the forefront of its development agenda in Indonesia, the Philippines and Vietnam. Indonesia aims to invest around $400 billion in the period 2020 to 2024 to improve airports, power, and mass transit.
The Philippines Build, Build, Build programme also plans to invest $164.7 billion in the coming decades and more will be needed.Vietnam plans to build more than 5,000 km of expressways by 2030 (up from 3,841 km in 2021), 172 routes of national highways with a total length of 29,795 km (up from 5,474 km in 2021) and three urban beltways in Hanoi.
Progress thus far
Capital markets across SEA recorded robust IPO activity in calendar year 2021. Indonesia listed 54 companies, the largest number of listings in SEA, raising total funds of more than $2 billion, almost six times the $377 million raised in the year 2020. Thailand had 41 IPO listings in 2021. The Thai exchange raised more than $4 billion for the second consecutive year. A strong currency, stable economy, low interest rates and high domestic liquidity contributed to Thailand’s strong performance in attracting investment through IPOs. The Philippines raised around $1.8 billion from seven IPO listings in 2021, more than the funds raised in the previous four years. Malaysia’s IPO market remained vibrant with 29 IPO listings, registering an increase of 53 per cent as compared to 2020.
The amount raised through IPOs in the country was around $0.34 billion, a decrease of 31 per cent as compared to 2020. The Singapore Exchange (SGX) raised around $1.2 billion from eight IPO deals. Of the IPOs listed in the stock exchanges of these countries, some came from infrastructure companies.
Despite the growing interest of nations in the infrastructure sector, IPO activity in the infrastructure sector has been low. Indonesia is at the forefront of the boom in infrastructure redevelopment taking place across SEA. In June 2021, PT Archi Indonesia Tbk got listed on the Indonesian Stock Exchange, raising around $64 million. In November 2021, Indonesia’s stateowned tower operator company Mitratel also got listed on the stock exchange. The company debuted with an IPO of around $1.2 billion. The company has plans to use 90 per cent of the funds raised to upgrade and expand its network, including adding 6,000 new towers.
PTT Oil and Retail Business Public Company limited, an infrastructure company, took the top spot in Thailand in 2020-21, raising $1.8 billion. This has been the largest SEA oil and gas IPO since 2007. UBON Bioethanol Public Company Limited was listed on the stock exchange in Thailand in September 2021 and raised more than $75 million. Premier Tank Corporation Plc (PTC) became the first fuel tank storage provider company in Thailand to be listed on the market for alternative investment (MAI) in February 2022. The company offered 410 million shares and received a paid-up capital of around $6 million. The listing was aimed at raising funds to increase its liquidity and repay debts.
The company also has plans to extend rail routes for oil transportation and expand its business. In December 2021, Solar Philippines Nueva Ecija Corporation, a subsidiary of Solar Philippines, the largest solar energy provider in the Philippines, debuted on the country’s stock exchange and raised more than $54 million. JS Land Plc, a joint venture real estate development entity, debuted on the Cambodian Securities Exchange. The company listed around 8,281,000 shares at around $0.46 per share and raised $2.12 million. Britania Public Company Limited, a housing and property developer company, came up with its IPO in December 2021. The company raised $80 million from the issue.
The company has plans to use the funds to meet its working capital needs and repay its debts. Mooreast Holdings Limited debuted on the SGX in November 2021 and raised more than$8.5 million from 39 million shares invited at a price of $0.22 each. In 2021, Malaysia received a foreign direct investment flow of more than $70 billion. It is a significant investment destination amongst SEA countries. Investors from Singapore, the Netherlands, China, Austria and Japan accounted for about 89 per cent of the total flow of investment. Most of these investments have been centred around primary and manufacturing industries as well as in the services sector.
Major funds in 2021 were attracted by technology-driven companies through IPOs. Many tech-focused start-ups are also being considered as unicorns for promoting growth and attracting foreign investments in the SEA countries. However, IPOs from infrastructure companies still remain very limited. There is tremendous growth potential and untapped opportunities in the capital market in SEA, with the diverse sources of investment and growing interest by sovereign wealth funds in Asian businesses. They have huge scope to get funds from ageing Asian economies like Japan, China and South Korea, which have expertise in building infrastructure. Therefore, infrastructure companies getting themselves listed could help attract funds to a sector that requires them massively for development.