More enquiries on IPO options during pandemic

by FARA AISYAH / pic by MUHD AMIN NAHARUL

THE increased liquidity in equity markets is leading more companies to enquire about the process of an IPO exercise to raise funds amid the Covid-19 pandemic.

Deloitte Malaysia disruptive events advisory leader Wong Kar Choon said many companies believe the time is right to raise capital due to the active retail participation in the market now.

“We saw a lot of enquiries on IPO post-Movement Control Order (MCO). I think companies are trying to plan ahead their listing exercises.

“The MCO and Covid-19 pandemic have created some positive elements in the capital market including higher retail participation due to the six-month loan moratorium and low Overnight Policy Rate,” he said at the Deloitte’s perspectives on South-East Asia’s IPO market performance and outlook for 2021 virtual media conference yesterday.

He added that the loan moratorium from April to September provided excess funds for people to trade, while the low interest rates on fixed deposits and savings created an awareness for people to seek investments that offer better yields.

As at Nov 15, 2020, a total of RM1.96 billion was raised on Bursa Malaysia year-to-date (YTD), higher than the RM1.82 billion raised in the same period last year.

The average trading volume of securities on the local exchange increased by 86% and 208% for the second quarter (2Q) and 3Q respectively, compared to the same quarters in 2019.

He expects the high trading volumes and momentum to remain strong as investors are generally looking at stock specific rather than sectors, with a focus on companies related to technology and healthcare.

Bursa Malaysia’s biggest listing of the year was Mr DIY Group (M) Bhd which raised US$362 million (RM1.47 billion), making it the largest listing in three years.

As for the YTD, Bursa Malaysia recorded 18 new listings compared to 30 listings in 2019.

The top five IPO in Malaysia for the year as of Nov 15, 2020, are Mr DIY, Innature Bhd, Southern Cable Group Bhd, Aneka Jaringan Holdings Bhd and Powerwell Holdings Bhd.

Capital markets across South-East Asia stayed resilient in 2020 despite a host of uncertainties from the evolving global health crisis to the worsening US-China trade tensions and the impact of the US presidential election.

Total IPO activity in the region as at Nov 15, 2020, bucked the overall downward trend to inch up to pre-Covid-19 levels with total funds raised at US$6.44 billion from 100 IPOs.

Although the number of IPOs decreased by 38% from 161 IPOs in 2019, and the total IPO proceeds raised decreased by 12% from US$7.34 billion, the total IPO market capitalisation in 2020 increased by 3% to US$25.96 billion.