Asia-Pacific accounted for almost 60% of initial public offerings (IPO) globally in the first quarter of 2023 amid a bleak outlook for public markets, according to a report from Ernst & Young (EY).
Despite being the strongest region globally, the number of IPOs in APAC declined 6% year-on-year (YoY) to 175, while IPO proceeds fell 70% YoY to $12.7 billion, according to EY data.
Tech IPOs witnessed the highest volume in the region at 42, while the US saw only seven tech listings in the three-month period.
The data reflects strong investor appetite for tech stocks, coupled with the growing adoption of new technologies such as artificial intelligence (AI), 5G, and the Internet of Things (IoT), which are poised to drive significant growth in the sector in the coming years and potentially pave the way for more tech IPOs.
Indian bourses recorded the highest number of IPOs worldwide at 42, accounting for a 14% share in the global market in Q1 2023. Indonesia’s IDX ranked second, while Thailand and Malaysia were tied for 10th place.
IPO activity is expected to pick up in the Southeast Asian countries on the back of a manufacturing boom and as smaller companies in these markets show the appetite to go public and grow, the report noted.
Shenzhen came out on top in terms of IPO proceeds globally at $4.7 billion, accounting for 22% of the total earnings in the first quarter. The city was followed by Shanghai and Abu Dhabi’s ADX.
India announced significant changes in the regulatory framework last year for companies planning to go public, opening a new route and expecting to provide a solid foundation for future public listing activity and governance.
“Amidst persistent macroeconomic and geopolitical uncertainty, exacerbated by stress in the global banking system, IPO windows are fleeting and funding conditions are getting tougher, with investors prioritising value over growth,” Paul Go, EY’s global IPO leader, said in a statement.
The outlook for the next quarter comes amid a backdrop of a highly unforeseeable inflationary environment. But once signals of a more stable market with higher certainty return, investor confidence is likely to bounce back and companies that had initially pressed a pause on their IPO plans may resume, though at more modest valuations.
The backlog for IPOs continues to mount as companies hold out for markets to stabilise and rebound before listing. In Asia-Pacific, the biggest backlog is in the financial sector.
However, since the beginning of 2023, many Asian companies have commenced or resumed plans to go public on the Hong Kong bourse, including NYSE-listed Chinese wealth management platform Lufax, AI robot maker UBTech, and Indonesian courier services startup J&T Express. Meanwhile, China’s taxi-hailing app Dida, biotech firm Genecast, and IT services firm Edianyun have also announced reviving their Hong Kong listing plans.