Public Equity Capital Raised By Southeast Asian Firms at Four-Year High
Southeast Asian tech companies are bringing the attention of investors globally . In 2020, the startups in the Southeast Asian region raised more than $8.2 billion which is about four times more than in 2015. This tendency continued in 2021, with regional M&A hitting a record high of $124.8 billion in the first half of 2021, up from 83 per cent a year earlier. E-commerce and fintech companies in Southeast Asia are raising heavy amounts of capital as global investors bet on post-pandemic technology plays, investors and bankers said.
Data from Refinitiv shows that Public equity capital raising by Southeast Asian firms has rushed to a four-year high of $8.4 billion this year with companies like Indonesian e-commerce firm Bukalapak attracting strong interest in its IPO.
Private equity investments have jumped and reached $8.2 billion, enlarging the “unicorn” club of startups valued at more than $1 billion. Near-term fundraising activity will be led by Indonesian tech group GoTo’s expected completion of a $2 billion pre-IPO funding, while about a dozen startups are looking to list regionally, bankers and investors said.
The panic sticken pace of activity comes as the Covid-19 boosts consumers’ adoption of digital platforms while investors lookout for internet-based companies that are capable to grow their business faster in a region of 650 million people. Cash-rich global funds are also edging their attention on these opportunities, given China’s regulatory crackdown on technology companies.
“There’s strong interest from public market investors to get exposure to the growth profile of this region,” said Jeffrey Perlman, head of Southeast Aisa at buyout Warburg Pincus, one of the biggest investors in the region. Startups looking to list this year include online classified marketplace Carousell and Indonesian travel firm Traveloka.
Regional logistics group Ninja Van and Thai e-commerce enabler aCommerce both said an IPO was a possibility but gave no timeline. Other sources said Thai startup Pomelo Fashion was considering an IPO next year. “We do not see more exciting companies emerge. I would be constructive on the opportunities within Southeast Asia,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity.
Real opportunity:
According to a report from Google, Temasek and Bain & Co, Southeast Asia’s internet economy is forecast to triple to $300 billion by 2025 from end-2020. Reseach data shows that the total value of venture capital transactions has already hit a record $10 billion in the first half of this year, crossing 2020’s level of 8.2 billion.
“Indonesia, Vietnam and Thailand all these countries have large enough domestic populations where digitization opportunities can be unicorn size,” Jeffrey Jaensubhakij, chief investment officer at Singapore sovereign wealth fund GIC said. “The difficulty lies in which are the few business models that can really do pan-regional because that’s where the real opportunity is.”
Dealogic data shows that the region has also attracted interest from special purpose acquisition companies (SAPCs) and accounts for four of eight Asia-related targets unveiled this year. “Investors have also been to the move before in China and India, so they are looking to leverage that experience in a bigger way and avoid missing out on some of those same opportunities,” said Perlman from Warburg Pincus.
In April, Ride-hailing and food delivery firm Grab banged a record of $40 billion SPAC deal as part of a US listing. “It’s rare that our part of the world gets the attention. It’s not China or India or Australia or Korea but Southeast Asia,” said Hari Krishnan, chief executive officer of regional online marketplace PropertyGuru, referring to interest from SPACs. The Singapore based firm concurred a $1.8 billion merger with a SPAC backed by Richard Li and Peter Theil to list in the US.
US share performance of Singapore-based gaming to e-commerce firm Sea’s stellar since its listing four years ago has also motivated investors. Still, concerns are appearing over whether the plentiful liquidity is increasing company valuations and if they can be sustained in secondary markets.
Bukalapak has launched Indonesia’s biggest IPO of $1.5 billion after raising it up from $300 million. It saw its shares jump 55 per cent from its IPO price in the first few days before giving up most of its gains. “To justify its high enterprise value to sales multiples, Bukalapak will need to maintain annual revenue growth at around 50 per cent over the next five years, which seems like a rather difficult target,” said Oshadhi Kumarasiri, equity analyst at LightStream Research.
India became the most funded emerging market with startups raising $10.8 billion during the first half. According to the latest biannual report by the venture capital firm, Latin America followed suit raising $6.2 billion.
Data from Refinitiv shows that Public equity capital raising by Southeast Asian firms has rushed to a four-year high of $8.4 billion this year with companies like Indonesian e-commerce firm Bukalapak attracting strong interest in its IPO.
Private equity investments have jumped and reached $8.2 billion, enlarging the “unicorn” club of startups valued at more than $1 billion. Near-term fundraising activity will be led by Indonesian tech group GoTo’s expected completion of a $2 billion pre-IPO funding, while about a dozen startups are looking to list regionally, bankers and investors said.
The panic sticken pace of activity comes as the Covid-19 boosts consumers’ adoption of digital platforms while investors lookout for internet-based companies that are capable to grow their business faster in a region of 650 million people. Cash-rich global funds are also edging their attention on these opportunities, given China’s regulatory crackdown on technology companies.
“There’s strong interest from public market investors to get exposure to the growth profile of this region,” said Jeffrey Perlman, head of Southeast Aisa at buyout Warburg Pincus, one of the biggest investors in the region. Startups looking to list this year include online classified marketplace Carousell and Indonesian travel firm Traveloka.
Regional logistics group Ninja Van and Thai e-commerce enabler aCommerce both said an IPO was a possibility but gave no timeline. Other sources said Thai startup Pomelo Fashion was considering an IPO next year. “We do not see more exciting companies emerge. I would be constructive on the opportunities within Southeast Asia,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity.
Real opportunity:
According to a report from Google, Temasek and Bain & Co, Southeast Asia’s internet economy is forecast to triple to $300 billion by 2025 from end-2020. Reseach data shows that the total value of venture capital transactions has already hit a record $10 billion in the first half of this year, crossing 2020’s level of 8.2 billion.
“Indonesia, Vietnam and Thailand all these countries have large enough domestic populations where digitization opportunities can be unicorn size,” Jeffrey Jaensubhakij, chief investment officer at Singapore sovereign wealth fund GIC said. “The difficulty lies in which are the few business models that can really do pan-regional because that’s where the real opportunity is.”
Dealogic data shows that the region has also attracted interest from special purpose acquisition companies (SAPCs) and accounts for four of eight Asia-related targets unveiled this year. “Investors have also been to the move before in China and India, so they are looking to leverage that experience in a bigger way and avoid missing out on some of those same opportunities,” said Perlman from Warburg Pincus.
In April, Ride-hailing and food delivery firm Grab banged a record of $40 billion SPAC deal as part of a US listing. “It’s rare that our part of the world gets the attention. It’s not China or India or Australia or Korea but Southeast Asia,” said Hari Krishnan, chief executive officer of regional online marketplace PropertyGuru, referring to interest from SPACs. The Singapore based firm concurred a $1.8 billion merger with a SPAC backed by Richard Li and Peter Theil to list in the US.
US share performance of Singapore-based gaming to e-commerce firm Sea’s stellar since its listing four years ago has also motivated investors. Still, concerns are appearing over whether the plentiful liquidity is increasing company valuations and if they can be sustained in secondary markets.
Bukalapak has launched Indonesia’s biggest IPO of $1.5 billion after raising it up from $300 million. It saw its shares jump 55 per cent from its IPO price in the first few days before giving up most of its gains. “To justify its high enterprise value to sales multiples, Bukalapak will need to maintain annual revenue growth at around 50 per cent over the next five years, which seems like a rather difficult target,” said Oshadhi Kumarasiri, equity analyst at LightStream Research.
India became the most funded emerging market with startups raising $10.8 billion during the first half. According to the latest biannual report by the venture capital firm, Latin America followed suit raising $6.2 billion.
