Flurry of IPOs in a dampened market
MALAYSIA’S initial public offering (IPO) market is seeing an influx of new faces despite the lacklustre stock market performance in the first half of the year.
Coming off of a tough economic situation brought upon by the Covid-19 pandemic, it is endearing to see an influx of initial public offerings (IPOs) so far since Malaysia announced its shift to the endemic phase beginning May 1, 2022.
And the momentum is seen by the pattern of listings. Bursa Malaysia saw a total of 20 listings so far: Twelve were from May 1 til today, compared to eight listings from January 1 to May 1 this year.
Several more IPOs are in the works for the rest of July and August. Three have listed on Bursa’s Main Market, while 13 listed on the ACE Market and four on the LEAP Market.
Chua Zhu Lian, group managing director of Vision Group, explained that IPOs have always been a natural progression for companies as a significant milestone to spearhead the next level of growth.
“It is also one of the common strategies of family led businesses to transform the business to become a more sustainable and professionally ran corporation,” he explained to BizHive.
To recap, in January this year, Bursa Malaysia forecast 37 listings in 2022, versus 30 last year.
When asked about the ramp
It is also one of the common strategies of family led businesses to transform the business to become a more sustainable and professionally ran corporation.
— Chua Zhu Lian, Vision Group group managing director
up in listings this year, Chua believed part of the trend was attributed to the backlog since the start of the pandemic.
“In addition, I think there are many companies who wish to enhance their capital structure to strengthen or expand their business in the post pandemic environment.
“Since the pandemic, I also observe that there are businesses with ‘eureka’ moments to tap into new demand arising from the changes in consumer behaviour and consumption patterns to diversify their business from business segments previously severely affected by the pandemic.
“I believe the trend will continue as there are many businesses with great potential in Malaysia, especially in East Malaysia where there is still relatively few companies that has achieved IPO status.”
As earnings is a key milestone for an IPO, Chua said that generally, businesses with sustainable growth prospects will have the best chance for successful listing.
“I believe sectors related to health, semiconductor and F&B will continue to attract investors while companies with a strong competitive edge and technical niche will be able to differentiate themselves from the rest of their peers,” he added.
“Companies which have the ambitions for an IPO can start the preparation process early by elevating their corporate structure, governance and disclosures.
“In addition, it will be crucial for companies to look into their sustainability and ESG practices as well as disclosures as that will be a key element that will be evaluated by both the regulators and investors in this day and age.
“Having professional and experienced guidance would certainly help to increase the chances of a successful listing.”