PH lags in Asean initial public offerings

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    With the listing of AllHome Corp. and Axelum Resources Corp. early this month, the Philippines has outdone itself from last year which had only one IPO listing, that of DM Wenceslao and Associates Inc.

    But the country still lags behind Indonesia which has 21 listings and Malaysia, 9, and which ranked the two among the top 10 exchanges in the world in terms of deals closed, according to UK-based accounting group Ernst and Young (EY). EY has recently released its quarterly Global IPO trends for the third quarter of this year.

    The Singapore Exchange (SGX), driven by listings of two sizeable REITS that raised $1.37 billion in the quarter, came up among the top 10 exchanges by proceeds.

    “In the Philippines, only one company completed an IPO as of Q3 (third quarter) 2019 while two additional deals were completed in October 2019 with total proceeds of approximately $425.9 million. IPO activity is expected to pick up with about 10 additional deals likely to be completed in Q4 (fourth quarter) 2019 subject to securing green light from the regulators and overall market conditions. If completed, 2019 will be an improvement from last year where the Philippines saw only one listing with proceeds of approximately $159 million,” said Dolmar.

    Montañez, partner at accounting firm SGV and Co., an affiliate of EY.

    Max Loh, EY Asean IPO leader, said the rebound in activity on Southeast Asia exchanges for the period “reflects the backlog of IPO aspirants waiting for the right time to come to market.”

    “Southeast Asian exchanges will continue to benefit from IPOs of entrepreneur-led companies and privatization of state-owned companies and, in the case of Singapore, REITS and business trust, given its leading position in that space,” he said.

    As a region, Southeast Asia posted 40 IPOs for the period for a combined proceeds of $2.9 billion. Southeast Asian exchanges saw 48 percent higher deal numbers and 555 percent higher proceeds during in the third quarter compared last year’s 27 IPOs and $440 million in proceeds).

    EY said the global backlog in high-quality IPOs will persist as issuers await more favorable market conditions.

    “Overall, 256 IPOs came to the market in Q3 2019 with total proceeds of $40.2 billion, a decrease of 24 percent by volume and 22 percent by proceeds compared with Q3 2018.The first nine months of 2019 (year-to-date 2019) saw a decline of 26 percent by deal volume (768 IPOs) and a 25 percent drop in funds raised ($114.1 billion) versus YTD 2018. While deal numbers were down, average first-day returns on the main markets were 27 percent and average current post-IPO performance was 32 percent,” it said.

    “As we enter into the traditional peak IPO season, we expect global IPO activity to pick up in the last quarter and into 2020 when there is more clarity to US-China trade tensions and developments around Brexit,” said Paul Go, EY Global IPO leader.

    In Asia-Pacific, IPO volume was down 9 percent (436 IPOs) and proceeds decreased by 27 percent ($46.1 billion) compared to 2018.

    “The launch of Shanghai’s STAR Market offset more muted activities in Hong Kong, Japan and Australia in Q3 2019, with Asia-Pacific exchanges seeing a decline of 2 percent by deal volumes (173 IPOs) and 29 percent by proceeds ($23.7 billion) in Q3 2019 compared to Q3 2018. Ongoing trade tensions between China and the US continue to impact IPO activity across parts of the region,” EY said in a statement.

    “However, Asia-Pacific continued to dominate global IPO activity, representing seven of the top 10 exchanges by volumes and five of the top 10 exchanges by proceeds. Average first day returns for IPOs on Asia-Pacific’s main markets rose to 51 percent, while average current returns soared to 71 percent, predominantly because of Shanghai’s STAR Market activity,” it added.