Several Southeast Asian companies are considering listing in the United States, banking on investor appetite for emerging market growth in the absence of Chinese stock offerings.
Senior executives at Funding Societies, a digital financing platform for SMEs, Gushcloud International, a Singapore-based entertainment company, and Sunday, a Thai insurance technology company, told Reuters they were considering New York as one of the locations. for its IPO.
These plans are in addition to those recently announced by the Vietnamese Internet company VNG Corp and the Philippine real estate company Hotel101 Global of DoubleDragon Corp, which want to go public in the United States, filling the void left by Chinese companies that suspended their IPOs in the United States. United after political tensions. With Washington stepping up, Beijing increased oversight of domestic companies seeking IPOs abroad and China’s economy plummeted and slowed.
“China’s shadow in the ASEAN region has narrowed since the world reopened after the pandemic,” said Leif Schneider, senior legal counsel at law firm DFDL Vietnam.
“Chinese competitors have gradually been marginalized due to domestic restrictions and the resulting domestic economic consequences,” he added. “These factors have allowed some of its ASEAN rivals to come to the fore.
ASEAN, the Association of Southeast Asian Nations, brings together Thailand, Singapore, Malaysia and Vietnam. Carsome Group, the EU’s largest automotive e-commerce platform, also said it is considering listing on several global stock exchanges, including the US, with a view to a possible listing.
Southeast Asian companies have raised about $101 million through U.S. IPOs since the start of the year, far less than last year’s $919 million, but bankers expect the pace to accelerate over the next 12 months as companies look for new sources of capital after relying on the private sector. funds in recent years.
By contrast, Chinese companies have raised $463.7 million through US listings since the start of the year, which is slightly above 2022 levels but just a fraction of the $12.96 billion and $12.48 billion raised in 2021 and 2020 respectively, according to LSEG data.
For investors seeking exposure to emerging markets, Southeast Asia is the ideal place, given the region’s strong economic growth and population growth, analysts say.
For example, according to the data, growth in Indonesia, Southeast Asia’s largest economy, accelerated to its highest rate in three quarters between last April and June, driven by strong household and government spending.
Some Southeast Asian companies seeking to list in the United States are seeking to raise between $300 million and $1 billion, with valuations ranging from $1.5 billion to $8 billion, bankers said, without naming companies.
Plans by Southeast Asian companies to go public in the United States should also cheer Asian Wall Street banks, which derive about a third of their revenue from capital market (ECM) operations, which have virtually dried up. exhausted with Chinese IPOs.
“For some U.S. investors who were focused on emerging markets, exposure to technology came largely from Chinese companies because they were the largest listed in the United States,” said Sunil Khaitan, head of ECM at Bank of America for Southeast Asia.
“Given the current caution towards China, these investors are keeping an eye on other emerging market names,” he added.
DIVERSIFIED PROFITABILITY
For businesses, the United States offers several advantages.
Kelvin Teo, co-founder and group chief executive of Funding Societies, told Reuters the United States was one of the company’s preferred options because it would offer a large pool of capital and a global investor base.
Andrew Lim, Gushcloud’s chief financial officer, also said a US listing would allow the company to benefit from investors’ “familiarity with fast-growing new economy companies.”
Companies in the logistics, technology, mining, electric vehicles and renewable energy sectors are the most likely to seek IPOs, both locally and abroad, said Tay, Hwee Ling, Deloitte’s disruptive events consulting leader for the Southeast Asian.
“International investors see the value in the portfolio diversification that Southeast Asia offers,” Tay added.
However, analysts say stock volatility and strict investor scrutiny could derail the expected IPO recovery in Southeast Asia.
Shares of Vietnamese electric vehicle maker VinFast have risen about 75% since their debut in August, but not without high volatility in a sluggish market.
Most American investors, however, are smart enough when it comes to due diligence.
“U.S. investors are generally knowledgeable and experienced in evaluating opportunities in different sectors, but it is generally helpful for Southeast Asian companies to inform investors about country-specific factors that may impact their businesses,” said Art Anuruk. Karoonyavanich, Singapore’s head of capital markets. DBS based. (Reporting by Yantoultra Ngui in Singapore and Scott Murdoch in Sydney; writing by Sumeet Chatterjee and Miral Fahmy)
