IPO market picking up pace


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KUALA LUMPUR: The local initial public offering (IPO) market is picking up pace as optimism in the economic recovery continues to encourage businesses to tap into the capital market.

Note that Malaysia recorded 14 listings in the first six months of 2021, raising approximately RM395mil with a market capitalisation of RM1.5bil. Of the 14 listings, two were main listings, seven in the ACE market and five in the Leap market.

The number of IPO deals in the first half of 2021 was double that of the first half of 2020, which only saw seven listings with RM196mil proceeds and an IPO market capitalisation of RM850mil.

Notably, the market last year was affected by the uncertainty brought on by the pandemic.

In its 2021 mid-year report on the Malaysia IPO Capital Market, Deloitte pointed out that certain businesses performed exceptionally well despite the challenging circumstances as they were able to adapt and meet market needs.

“For these fortunate organisations, the logical next step would be to expand and increase their organisation’s capacity. This has led to numerous organisations seeking equity funding through capital market and IPOs,” said Deloitte Malaysia IPO leader Wong Kar Choon.

“For these fortunate organisations, the logical next step would be to expand and increase their organisation’s capacity. This has led to numerous organisations seeking equity funding through capital market and IPOs,” said Deloitte Malaysia IPO leader Wong Kar Choon.“For these fortunate organisations, the logical next step would be to expand and increase their organisation’s capacity. This has led to numerous organisations seeking equity funding through capital market and IPOs,” said Deloitte Malaysia IPO leader Wong Kar Choon.

He highlighted OM Holdings Bhd, in particular, as a standout due to its dual listing on Bursa Malaysia and the Australian Securities Exchange.

The company was listed on the Main Market of Bursa Malaysia on June 22, 2021 and saw its share price rise by 10.12% at the end of the first day.

Wong added that Malaysia was not the only South-East Asian capital market that was doing well.

“Across the region, we continue to see an increase in capital market activities. Overall, the South-East Asian capital market had 59 IPOs in the first six months, raising a combined total of US$5.97bil (RM25bil).

“The top performing country and darling is still Thailand, having raised approximately US$3.3bil (RM14bil) in the first half of 2021 – contributing to approximately 55% of the capital raised in the region,” he said.

He believed that the rising vaccination rates in the country as well as in the region will continue to boost optimism and enable more companies that are looking to increase their presence and capacity to tap the capital market.

Additionally, he expects retail investor interest to remain strong towards the end of 2021 even though average trading volumes have decreased from the peak in 2020.

Wong also noted that there is a growing number of technology-based startups that are looking to tap the capital market, especially via special purpose acquisition companies (SPAC) in the United States.

“One key reason is because SPACs are seen as a faster alternative in raising capital than the traditional IPOs. Another is the sum of funds available, especially in the US capital market.

“Based on the data by Spacktrack.net, the current SPAC trust funds available in the US that are still searching for a viable business merger is approximately US$114bil (RM477bil). That is a lot needed to find a viable business within 24 months from a SPAC IPO.

“Although there has been a bit more talk of SPAC recently, it is not a new term in the Malaysia capital market. The Malaysia market had its first SPAC in 2011 with the listing of Hibiscus Petroleum Bhd.

“With enthusiasm into SPAC, we may also see a renewed interest in SPAC listing in the Malaysian capital market,” he said.

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