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SINGAPORE: Observers said Maxis' strong performance on its debut on Thursday reflects the pent-up investor demand for new offerings in Southeast Asia, and this demand is expected to continue rising.
Signs of economic recovery in Asia are bringing liquidity back to the market. Some US$38 billion worth of IPOs were launched globally in the third quarter of the year, compared to just US$11 billion in the six months to June.
Most of these offerings – about eight in 10 – came from Asia.
Lee Sze Yeng, IPO services partner, KPMG Singapore, said: "I think if you look at the economic recovery in this part of the world, with the equities market picking up by more than 50 per cent, both in Singapore and even the global index, it is not surprising to see more IPO activities happening in this region."
It has been a record year for Southeast Asia in terms of the amount raised through IPOs.
The US$3.3 billion IPO of Malaysia's Maxis is the largest-ever launched in the region, while CapitaLand's plan to list its Asian retail malls unit for US$1.8 billion is the second-biggest launched in Singapore.
But overall, the Southeast Asian IPO market still lags behind its Northeast Asian counterpart – Hong Kong and China. Analysts said it will take another six to nine months before the region catches up with its peers.
Teo Yi-Dar, investment director, SEAVI Advent Private Equity, said: "There had been a fair bit of corporate failures and frauds in 2008 and even in 2009 in this part of the world. And that has dampened investors' confidence in new issues and also IPOs. I think it takes time to heal and rekindle the confidence and interest in IPOs."
In spite of this, some observers remain optimistic. They said they expect strong IPO activity to pick up from as early as the first quarter of next year.
Len Wee, co-head, Kim Eng Corporate Finance, said: "Compared to 2008 and the first half of this year, there has definitely been an improvement and we are optimistic that market will improve further next year.
"Valuations are undemanding, the economic outlook has stabilised and fund managers are looking to invest to achieve returns on the monies under its management."
Mr Teo said: "By the second half of next year, we should see more activities and with that renewed interest, there's a better chance of markets over in Southeast Asia attracting good and bigger companies to come here and list. And if they do come here, obviously the size of the transactions would be much larger."
As a whole, Asia is again seen as leading the global IPO market in 2010. According to a recent survey by Ernst & Young, China and India ranked tops in IPO markets worldwide that would show recovery by end-2009, and they are likely to drive IPO activity over the next 12 months.
- CNA/so
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