More Southeast Asian companies consider US IPOs, filling gap left by Chinese peers

SINGAPORE/SYDNEY, Sept 19 (Reuters) – Several Southeast Asian companies are considering listing in the United States, banking on strong investor appetite for growth in emerging markets in the absence of Chinese stock offerings.

Top executives at leading SME digital financing platform Funding Societies, Singapore-based entertainment firm Gushcloud International and Thai insurance technology firm told Reuters on Sunday they were considering New York as one of their offering locations. initial public (IPO).

This is in addition to plans recently announced by the Vietnamese Internet company. VNG Corp. (VNZ.HNO) and Philippine real estate company DoubleDragon Corp. (DD.PS) Hotel101 Global list in the US, filling a gap left by Chinese companies that hit the pause button on US IPOs after political tensions with Washington escalated, Beijing stepped up scrutiny of domestic companies seeking to list abroad and China’s own economy slowed.

“China’s shadow in the ASEAN region has shrunk 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 into the spotlight.”

ASEAN, the 10-member Association of Southeast Asian Nations, includes Thailand, Singapore, Malaysia and Vietnam. Carsome Group, the block’s largest auto e-commerce platform, also said it was considering several global exchanges, including those in the US, for a possible listing.

Southeast Asian companies have raised about $101 million through U.S. IPOs so far this year, down sharply from $919 million last year, but bankers expect the pace to accelerate in 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 U.S. listings so far this year, slightly above 2022 levels but a fraction of the $12.96 billion and $12.48 billion. collected in 2021 and 2020 respectively, according to LSEG data.

For investors seeking exposure to emerging markets, Southeast Asia fits the bill, given the region’s strong economic growth and population surge, analysts say.

For example, growth in Indonesia, Southeast Asia’s largest economy, accelerated to its highest rate in three quarters in the latest April-June period, driven by strong household and government spending, according to data. presented.

Some Southeast Asian companies seeking a U.S. listing are seeking to raise between $300 million and $1 billion, with valuations ranging from $1.5 billion to $8 billion, bankers said, without naming any companies.

Plans by Southeast Asian companies to list in the United States should also encourage Wall Street banks in Asia, which generate about a third of their revenue from equity capital market (ECM) deals. in English) that were practically exhausted by the Chinese IPOs.

“For some of the U.S. investors who were focused on emerging markets, their technology exposure largely came from Chinese companies because they were the biggest names listed in the U.S.,” said Sunil Khaitan, head of ECM at Bank of America. for Southeast Asia.

“With the current cautious stance around China, these investors are keeping an eye on some of the other emerging market names,” he added.

VARIOUS PERFORMANCES

For businesses, the United States offers several advantages.

Funding Societies co-founder and group chief executive Kelvin Teo told Reuters the United States was one of the company’s preferred options because it would provide a large pool of capital and a global investor base.

Andrew Lim, Gushcloud’s chief financial officer, also said a US listing would expose the company to “investors’ familiarity with fast-growing new economy companies.”

Companies in sectors such as logistics, technology, mining, electric vehicles and renewable energy are more likely to seek IPOs both locally and abroad, said Tay Hwee Ling, Southeast Asia Disruptive Events Advisory Leader at Deloitte.

“International investors are seeing the value of the portfolio diversification that Southeast Asia offers,” Tay added.

However, the expected stock rally in Southeast Asia could be derailed by stock volatility and tight investor scrutiny, analysts say.

Shares of Vietnamese electric vehicle maker VinFast are up about 75% since their debut in August, but not without strong volatility in reduced trading.

However, most American investors are smart enough when it comes to due diligence.

“U.S. investors are generally competent and experienced in evaluating opportunities in different sectors, but it is often helpful for Southeast Asian companies to educate investors about country-specific factors that can affect their businesses,” said Art Anuruk. Karoonyavanich, head of capital markets at DBS. based in Singapore.

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