<article>Despite global economic and geopolitical headwinds, Malaysia&#8217;s public market fundraising managed to stay more or less resilient in 2023.</article>

Despite global economic and geopolitical headwinds, Malaysia&#8217;s public market fundraising managed to stay more or less resilient in 2023.
Bursa Malaysia hosted 32 initial public offerings (IPOs) last year, which raised a cumulative $780 million (3.57 billion ringgit). This is only a tad below 2022&#8217;s 35 IPOs that had cumulatively raised $800 million. The volume of IPOs also fell below the bourse&#8217;s initial target of 39 IPOs for the year.
According to a senior executive at a top Malaysian investment bank, who requested anonymity, the IPO volume did not meet the bourse&#8217;s target as a few companies postponed their listing plans when the projected valuation did not meet their expectations. “Despite big banks being brought in to do marketing, there was insufficient demand [for the shares] at the price point that the issuer wanted to list at,” said the banker regarding one of his clients that decided to postpone its IPO in 2023.
DealStreetAsia could not ascertain which companies withdrew their IPO plans last year.
The market had opened strongly with 10 listings in the first quarter of 2023 but soon slowed. There were only six more listings by the end of the first half of the year. Though Bursa Malaysia initially maintained its confidence in meeting the initial IPO volume target of 39, the number was revised to 31 in November as only 29 IPOs had taken place till then.
2023&#8217;s IPO volume and fundraising, though, was still higher than in the pre-pandemic years (see chart).
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According to Ernst &amp; Young&#8217;s (EY) Global IPO Trends 2023 report, Malaysia&#8217;s 2023 IPO activity surpassed the average activity observed over the previous five years—with a 21% increase in IPO numbers and a 25% surge in IPO proceeds compared to the five-year average.
The newly-listed companies of 2023 had a combined market capitalisation of $3.9 billion (17.97 billion ringgit), based on the share price at the end of their first day of trading. This was more than 2022&#8217;s corresponding figure of $2.6 billion—a sign of steady retail investor confidence.
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The top IPO of the year was by DXN Holdings Bhd, a health food supplement company, that raised around 653 million ringgit in its IPO in May.
<h3>Electronics and semiconductor players in vogue</h3>
One clear winner in the Malaysian IPO market last year was the semiconductor and electronics manufacturing industry—a strong sector in the country for around three decades, which is now seeing renewed vigour.
Geopolitical tensions between Washington and Beijing have prompted semiconductor and electronics companies to diversify their production beyond China, with the likes of chipmaker Intel and Infineon announcing multi-billion dollar expansions in Malaysia in 2023.
The trend had a rub-off effect on the IPO market—such companies dominated the list of top 10 Malaysian IPOs by proceeds.
This includes electronics manufacturers Nationgate Holdings Berhad and Cape EMS Berhad, integrated circuit (IC) designer Oppstar Berhad, as well as semiconductor and precision machining company CPE Technology Berhad.
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As of 2022, Malaysia’s semiconductor industry held a 7% share of the global market and contributed 23% of the United States’ (US) semiconductor trade, according to Malaysia&#8217;s Ministry of International Trade and Industry.
<h3>Expectations for 2024</h3>
One recurring theme in the analyses of the Malaysian markets is that the country is finally witnessing political stability. A coalition government led by Prime Minister Anwar Ibrahim has lasted for over a year now, after the general election held in November 2022. 
The country had witnessed three different governments between the 2018 general elections and 2022, largely due to political infighting.
Deloitte and Malaysia’s Affin Hwang Investment Bank (AHIB) have said that they are expecting key government initiatives, such as economic structural reforms and the expansion of the country’s energy and industrial sectors, to pass through.
Industries that are set to be prioritised by the government include electronics, chemicals, and electric vehicles (EVs).
“The technology, healthcare and renewable energy sectors may see increased [IPO] activity. This is consistent with global trends and current investments focusing on biotechnology and medical sectors in Malaysia,” said Liew Chee Yoong, assistant professor of finance at UCSI University Malaysia. 
“Government policies promoting digitalisation and sustainable development could positively influence the IPO market, especially for companies in tech and green energy,” added Chee Yoong.
AHIB also said that it expects advanced economies to start cutting interest rates in the second half of 2024, with the possibility of the US Federal Reserve easing in the fourth quarter of 2024—leading to dollar weakness and a stronger ringgit.
&#8220;We believe this will be a key catalyst to improve sentiment in the Malaysian equity market and support a KLCI (Kuala Lumpur Composite Index) rebound in H2 24,&#8221; it said.
Bintang Capital Partners founder and chief executive officer Johan Rozali-Wathooth said that he remains confident that private equity and venture capital investors will see stable exit opportunities through IPOs in the country.
&#8220;Having spoken to those who are in the market, both advisors and prospective issuers—the conversations seem to signal optimism on pipeline volumes. The more interesting question would be figuring out how the Malaysian market can be more vibrant and perhaps carve out a unique &#8216;theme&#8217; or &#8216;niche&#8217; to differentiate itself from the rest of the regional markets,&#8221; said Johan.
&#8220;If we could do this, especially given the redirection of portfolio flows due to ongoing global tensions—whether trade or political—Malaysia could emerge as a winner,&#8221; he added.

Pramod Mathew

Bursa Malaysia hosted 32 IPOs last year, which raised a cumulative $780m. This is only a tad below 2022's 35 IPOs that had cumulatively raised $800m.

Malaysia's IPO market holds up in 2023 despite economic headwinds

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Malaysia's IPO market holds up in 2023 despite economic headwinds

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