The Vietnamese initial public offering (IPO) market closed last year with eight deals and proceeds of $71 million, much higher than the $16 million recorded a year earlier, but the combined market cap dropped sharply, according to a new Deloitte report.
The combined market capitalization for the eight deals was $537 million, about one-third of the $1.65 billion posted in 2021.
Out of the eight, six were listed in the first half of 2022 as companies and investors were more cautious in the second half of the year due to uncertainties regarding global and local capital markets, said Deloitte’s Southeast Asia IPO Capital Market 2022 full year report.
Vietnam’s IPO market focus shifted from real estate in 2021 to industrial and consumer products in 2022. It is expected that consumer products will continue to play a key role, with highly anticipated upcoming IPOs in this sector, according to this February’s study.
The entire region saw 163 IPOs last year, a 7% increase compared to 152 in 2021. The Southeast Asian IPO market closed last year with a market cap of $56.1 billion. Although funds raised decreased by 43% to $7.6 billion, the market cap increased 10.3% from 2021, according to the full-year report.
Southeast Asia IPO figures for 2022 compiled by Deloitte said Thailand and Indonesia were top of the table for 2022; each raised above $2 billion, and collectively accounted for 78% of total funds raised across the region. Malaysia witnessed a 138% increase in IPO funds raised.
The study forecast Vietnam’s economy to grow 6.5% this year, compared to the 8.02% secured last year.
This slower growth outlook stems from uncertainties in the global economic environment, and dependency on overseas partners for manufacturing activities, the consulting and corporate services firm said.
“There is a strong pipeline of companies waiting to go public subject to better market conditions. Regulatory changes are expected to boost investor confidence and stabilize the economy in the longer run which will translate into a more active stock market,” the report wrote for Vietnam this year.
For the whole region, Tay Hwee Ling, disruptive events advisory leader, Deloitte Southeast Asia and Singapore, said: “There is still room for high growth in Southeast Asia, as the region emerges from the Covid-19 crisis. We expect IPO activity to go through cyclical highs and lows, as the market re-calibrates from the pandemic mindset to regular programming.”
She added, “While valuations may be generally lower for tech companies now, the ones with solid business fundamentals and the ability to prove profitability will still be able to achieve optimal market valuation and benefit from the capital markets.”