China’s crackdown on technology companies is prompting global investors to look for new opportunities across Asia, contributing to a record increase in initial public offerings (IPO) from India to South Korea that shows few signs of slowing.
Tech companies from those countries and Southeast Asia have raised US$8 billion from first-time share sales this year, already blowing past the previous annual peak.
The tally is poised to grow bigger with planned listings by companies including Indian fintech giant Paytm and Indonesian Internet conglomerate GoTo, both of which might break local fundraising records.
Photo: Bloomberg
Long overshadowed by their Chinese peers, this new crop of start-ups is coming of age just as Beijing’s clampdown puts a damper on listing and growth prospects in what had long been the region’s hottest IPO market.
The result, some bankers say, might be the start of a new era for tech listings in Asia. Investors are already boosting exposure to markets outside China, with some buying into IPOs from countries such as India and Indonesia for the first time.
Prospective issuers that historically benchmarked themselves against Chinese companies are highlighting similarities to other global peers in hopes of attaining higher valuations.
“These are strong companies and stories in their own right, but the overwhelming demand has been enhanced by rotation away from China tech,” said Udhay Furtado, cohead of Asia equity capital markets at Citigroup Inc.
China’s regulatory onslaught, now in its 10th month since the shock implosion of Ant Group Co’s (螞蟻集團) IPO, has slashed valuations for the nation’s listed tech companies by nearly 40 percent.
It has also forced many start-ups to pause their IPO plans after regulators announced a stricter vetting process for overseas offerings.
China and Hong Kong accounted for about 60 percent of Asian tech IPOs since the end of June, down from 83 percent in the second quarter, according to data compiled by Bloomberg.
About three-quarters of Chinese companies that listed overseas this year are trading below their IPO prices.
Meanwhile, deals in smaller markets are attracting outsized demand as investors bet on increasingly Internet-savvy populations, growing consumer spending and a new class of tech entrepreneurs.
PT Bukalapak.com, an Indonesian e-commerce firm, raised US$1.5 billion near the end of last month in the country’s largest IPO, far outstripping an early goal of US$300 million to US$500 million.
Zomato Ltd, an Indian online food-delivery and restaurant platform, received bids worth 1.5 trillion rupees (US$20.41 billion) from large funds for its anchor tranche, making it one of the most popular Indian offerings among institutional investors. The company raised US$1.3 billion last month.
KakaoBank Corp, South Korea’s first Internet-only lender to go public, sold US$2.2 billion of new shares last month and soared more than 70 percent in its trading debut.
The hurdle for allocating capital to tech companies in China “is now much higher than it was even a month ago,” said Vikas Pershad, a portfolio manager at M&G Investments (Singapore) Pte. “The net exposure to China tech is lower and the net exposure to technology-driven business models outside of China is higher.”
One banker who asked not to be named discussing client information said that some Hong Kong-based investors who previously focused on Chinese deals are participating in tech IPOs elsewhere in the region.
US hedge funds are also looking at India more closely, another banker said.
Morgan Stanley research analysts recently advised clients to rebalance their Internet holdings away from China and into India and Southeast Asia.
“Are investors more interested? Definitely,” said William Smiley, cohead of Asia ex-Japan equity capital markets at Goldman Sachs Group Inc. “Global capital competes among itself and investment opportunities are judged on both an absolute and relative basis.”
Whether the enthusiasm will last is an open question. Bukalapak.com briefly dipped below its offering price this month, although the stock has since rebounded. Zomato and KakaoBank are trading 64 percent and 115 percent above their IPO prices respectively.
A growing pipeline of deals would put investor demand to the test. Paytm — formally called One97 Communications Ltd — has filed for a 166 billion rupee IPO that is set to be India’s largest.
Policybazaar, an online insurance marketplace, is looking to raise as much as 60.18 billion rupees.
GoTo, formed by the merger of Indonesian ride-hailing giant Gojek and e-commerce provider PT Tokopedia, is planning a domestic IPO this year before seeking a US listing. It is raising funds at a valuation of US$25 billion to US$30 billion, meaning it could become Indonesia’s biggest debut.
“There are increasingly diverse sources of capital investing in leading Asia-based growth businesses,” said Gregor Feige, cohead of ECM Asia ex-Japan at JPMorgan Chase & Co. “Sovereign wealth funds are more active across the board. They’re leaning in and the global long-only community is also increasingly comfortable with local listings across Asia.”
The flood of tech IPOs in Southeast Asia and India is poised to reshape markets where benchmark indexes have historically focused on “old-economy” sectors such as energy and finance.
Favorable demographics and domestic consumption growth in Southeast Asia “have not translated fully into stock market performance of late, as some of the fastest growing businesses were not listed,” said Pauline Ng (黃寶麗), a portfolio manager at JPMorgan Asset Management.
The growing representation of “new-economy” companies means these markets “can no longer be ignored,” she said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
CHIP BOOM: Revenue for the semiconductor industry is set to reach US$1 trillion by 2032, opening up opportunities for the chip pacakging and testing company, it said ASE Technology Holding Co (日月光投控), the world’s largest provider of outsourced semiconductor assembly and test (OSAT) services, yesterday launched a new advanced manufacturing facility in Penang, Malaysia, aiming to meet growing demand for emerging technologies such as generative artificial intelligence (AI) applications. The US$300 million facility is a critical step in expanding ASE’s global footprint, offering an alternative for customers from the US, Europe, Japan, South Korea and China to assemble and test chips outside of Taiwan amid efforts to diversify supply chains. The plant, the company’s fifth in Malaysia, is part of a strategic expansion plan that would more than triple
Taiwanese artificial intelligence (AI) server makers are expected to make major investments in Texas in May after US President Donald Trump’s first 100 days in office and amid his rising tariff threats, Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA, 台灣電子電機公會) chairman Richard Lee (李詩欽) said yesterday. The association led a delegation of seven AI server manufacturers to Washington, as well as the US states of California, Texas and New Mexico, to discuss land and tax issues, as Taiwanese firms speed up their production plans in the US with many of them seeing Texas as their top option for investment, Lee said. The
RSS