When companies sell shares to go from private ownership to public through Initial Public Offerings (IPOs), they can raise more capital, boost their marketability, and give investors a return on investment (ROI). Unfortunately, Southeast Asia’s IPOs in 2024 have not gone as expected, though, with very few businesses listing on the stock market and less money raised than in previous years.

According to professional services firm Deloitte’s Mid-Year IPO Snapshot 2024, IPOs in Southeast Asia in the first half of the year (H1) saw a 21% decrease compared to 2023 H1. Additionally, there was a 71% decrease in market capitalisation—the value of a publicly traded company—and a 59% drop in the money raised compared to 2023 H1. 

Here are the top VC trends in Southeast Asia and what they reveal about 2025 and beyond

There have been no blockbuster IPOs to date in 2024, with only one raising more than USD 200 million in H1, compared to three in 2023 H1 worth more than USD 600 million each. The Deloitte report also points out that the second half of each year (H2) has always been the better-performing half between 2020 and 2022. However, hopes are tentative as 2023 H1 to 2024 H1 show a downward trend and a subdued IPO market. 

DealStreetAsia reported that in Q1-Q3 of 2024, only 93 IPOs in Indonesia, Malaysia, Thailand, the Philippines, and Singapore raised $2.5 billion, compared to 123 IPOs in 2023, which raised $4.9 billion. 

Factors affecting the state of IPOs in Southeast Asia

The Deloitte report highlighted the top ten listings in the Association of Southeast Asian Nations (ASEAN). These include Thai Credit Bank Public Company Limited, Alpha IVF Group Berhad, Prolintas Infra Business Trust, Feytech Holdings Berhad, PT Ancara Logistics Indonesia Tbk, and OceanaGold (Philippines), Inc, and four others.

Vietnam only registered one IPO in the first half of 2024, according to Deloitte’s Southeast Asia Mid-Year IPO Snapshot 2024. Tay Hwee Ling, Deloitte’s Southeast Asia accounting and reporting assurance leader, said that despite a positive growth outlook and increasing foreign direct investment (FDI) in ASEAN, there were significant factors affecting the market conditions and investor sentiments, such as: 

Prolonged geopolitical instability: Global conflicts have disrupted supply chains, pushed prices up, raised energy costs, and reduced economic activities. These conflicts in Ukraine, the Middle East, and tensions with China have made investments unlikely by making it challenging for companies, especially venture capital (VC) firms, to raise or deploy capital to startups with the potential for success.

High interest rates and ongoing inflation concerns: The global economic issues that saw the United States Federal Reserve hiking interest rates to curb inflation have reduced liquidity. Thus, VCs and angel investors have struggled to raise capital to invest in emerging startups in ASEAN. With the volatility of stock markets worldwide, elections in the US creating uncertainty, and political conflicts escalating globally, economies may continue struggling into 2025.

Regulatory climate: The regulatory climate in Southeast Asia is complex. Sometimes, it eases prohibitive policies in sectors like fintech or hinders the entire economy through restrictive or country-isolating regulations. For example, Startup Genome noted Singapore’s business-friendly laws that attract founders, foreign institutions, and VC firms to develop innovative solutions for the region. Yet, few IPOs came out of there.

The challenge of adapting because of volatility: Tay Hwee Ling expressed optimism that Southeast Asia’s subdued IPO market would improve beyond 2024 as investors and IPO candidates adapt to the high interest rate regulations, geopolitical tensions, and overall global economic landscape.

Environmental concerns drawing investments away: Investors have been redirecting their funds toward greentech companies to support the development of solutions for climate change, pollution, soil regeneration, and more. Regulators have also been imposing climate reporting requirements to meet sustainability goals. Companies in sectors not yet complying with environmental, social, and governance (ESG) metrics might not receive capital since VCs deploy the funds elsewhere.

Outlook for IPOs in Southeast Asia going into 2025

While the decreasing IPO situation may sound bleak, several strategies may help revive the sector and reverse the downward trend into 2025. 

According to an Ernst & Young (EY) report, gradually broadening IPO sectors will open doors to more diverse investor opportunities. Although elevated interest rates, monetary tightening, inflationary pressures, sanctions, and supply chain disruptions have affected companies, the challenges create opportunities. 

Reducing these negative factors will ease pressure, increase available funds, and enable founders to invest in other businesses. Moreover, VCs will be able to dish out more capital than they currently are.

Cross-border listing has expanded into many regions, including the Asia-Pacific (APAC) area, representing a 20% year-on-year increase. Currently, there is enthusiasm for IPOs in Southeast Asia that focus on artificial intelligence (AI)- powered businesses and services.

Investors are focusing on companies with “proven profitability and sustainable cash flows.” While Southeast Asia’s IPOs in 2024 are disheartening, there is hope that the region will rebound when the volatile global economy settles.