Companies in South-east Asia raised a record US$4.9 billion through initial public offerings (IPOs) in the first six months of this year, according to Bloomberg’s equity capital markets data.

With a further US$4.1 billion raised through additional and rights offerings, the total amount raised by these newly listed firms via the equity capital markets was up 50 per cent from the pre-Covid-19 level in the first half of 2019.

The newly listed firms recorded an average return of 59 per cent in their respective first months of trading.

Indonesia saw the most deals in the region, with 23 companies listing on the Indonesia Stock Exchange in the first half of this year. Bloomberg deemed the country to be “on track for a record year”, with e-commerce firm Bukalapak.com’s US$1.5 billion IPO this month being the largest listing in a decade.

By amount raised in the first six months, however, Indonesia ranked third in the region at US$503 million.

Thailand came in tops with US$2.8 billion, accounting for 57 per cent of the region’s total. This was driven by the listing of PTT Oil and Retail Business, which is a unit of state-owned oil and gas company PTT, as well as that of microfinance lender Ngern Tid Lor.

Coming second was the Philippines, with US$1.3 billion raised.

The top three sectors raising funds via IPOs were oil and gas, food and diversified financial services, though this was mainly due to the two large IPOs in Thailand and that of food company Monde Nissin in the Philippines, with each of the three raising about US$1 billion.

About a third of the newly listed companies said that they would use part of the funds raised to repay debt or loans, up sharply from under 5 per cent in the year-ago period, and 19 per cent in 2019.

South-east Asian companies are poised to resume record bonds issuance, after this was disrupted by Covid-19 last year, said Bloomberg. In the first six months of this year, US$84.2 billion was issued in corporate bonds, with Malaysia accounting for a third of this.

Bloomberg’s Asia-Pacific head of global data Vatsan Sudersan noted that there have been fewer bond defaults, as government measures have helped businesses weather a liquidity crunch.

“Investors should monitor current restructured loans to see how much will be converted into banks’ non-performing loans or be written off, post government support,” he said.

“Investors should continue to watch the debt-to-equity ratio of companies to gauge their ability to pay off or take on more debt. In the medium term, investors should review the investment in companies’ capital expenditures and the impact of that in revenue growth to determine their sustainability.” – (The Business Times)

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