The success of Kakao Pay’s IPO comes as a relief in many respects. The Ant Group-backed South Korean firm’s shares more than doubled in their November 3 debut, giving it a higher market value than many incumbents – just as was the case with Kakao Bank’s IPO – and assuaging concerns that an ongoing regulatory crackdown on fintechs could stymie its steady ascent.
Hong Kong’s IPO market had a banner year through September, posting its best performance since 1980 on the back of a flurry of listings by Chinese firms. Up to 71 companies raised nearly US$36 billion on the Hong Kong Stock Exchange (HKEX) from initial stock sales and secondary listings. Seven of the 10 biggest listings were Chinese tech firms. However, most of the funds were raised in the first half of the year. In recent months, the market has slowed sharply amid a highly uncertain and restrictive regulatory environment.
2021 has been a banner year for Indonesia’s tech industry, from the strong performance of key industry players to fundraising in private markets to IPOs. Data compiled by Bloomberg show that companies in Southeast Asia raised a record US$4.9 billion from January to June. 23 companies listed shares on the Indonesia Stock Exchange (IDX) during that period, leading the region. The deal pipeline has remained active in the second half of the year as well.
Online investing has rapidly grown in Indonesia in recent years, with the rise of a digitally savvy generation of middle-class consumers eager to maximize returns on their savings. The ascendancy of startup Ajaib, often compared to the U.S.’s Robinhood, reflects the online investing boom in Southeast Asia’s largest economy.
The race is on to attract SPAC mergers in Asia. Having already rejigged regulations to facilitate SPACs, Singapore has a head start on its competitors. That said, the Hong Kong Stock Exchange (HKEX) will be aiming to attract very different companies than Singapore Exchange (SGX). SGX’s focus will be Southeast Asia tech, while Hong Kong will lean heavily towards mainland China biotech and perhaps tech firms in sectors with strong government support. What remains to be seen is if Hong Kong is willing to adjust regulations to create a more favorable environment for SPAC listings.
Hong Kong’s IPO market appears to have found its niche, acting as an offshore – but not in the same sense as New York – hub for up-and-coming Chinese companies to raise capital. Despite Beijing’s renewed emphasis on nurturing mainland capital markets, in the short run it will be hard for any of the mainland exchanges to compete with Hong Kong.
It has been a banner year for firms going public in Asia, with the IPO market booming from Hong Kong to Seoul to Mumbai. The same cannot be said for SGX, which has been much quieter. Thus far this year, the exchange has seen just three IPOs. As always, limited liquidity and sub-par valuations are problems. Something needs to be done to turn things around.
Chinese companies raised more than US$12 billion in U.S. markets in the first half of 2021, a half-year record, according to Dealogic. The great U.S.-China financial decoupling had seemingly hit a snag. Then came Didi Chuxing's catastrophic debut on the NYSE, and just like that, the U.S. IPO pipeline for Chinese firms froze. But the companies have to list somewhere offshore and Hong Kong will likely step in to fill the void.
Indonesia’s tech juggernauts are coming into their own this year. First Gojek and Tokopedia merged to create GoTo, which plans to list in both the U.S. and Indonesia. Now Tokopedia’s rival Bukalapak has announced its own plans to go public on the Indonesia Stock Exchange in what looks to be the archipelago nation’s largest ever IPO. Bukalapak recently said that it would increase its IPO size to US$1.5 billion.
Two IPOs are better than one, as far as Kakao is concerned. The banking and payments arms of Korea’s super app are both preparing to go public in Korea in August. Kakao Pay, South Korea’s largest payments provider, which has 36 million users and is backed by Ant Group, plans to raise up to 1.6 trillion won ($1.4 billion). Kakao Bank, South Korea’s largest online lender, could raise up to 2.55 trillion won.
Perhaps there was nowhere for Hong Kong’s IPO market to go but down. From January-March, fundraising hit an all-time high of US$13.9 billion while Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million), up 70% year-on-year. At that point, China’s fintech crackdown, which has widened to target tech giants in general, had yet to impact market sentiment.
China’s fintech crackdown is hurting some of the country’s largest tech firms, but has yet to dampen investor appetite for Chinese tech listings in Hong Kong. In fact, Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million) in the January-March period, up 70% year-on-year. Driving the boom were listings by Chinese tech firms of various stripes, including video-streaming platform Kuaishou (which raised US$5 billion) as well as secondary listings by search giant Baidu and video-sharing platform Bilibili. The first quarter is normally the slowest for Hong Kong IPOs as it coincides with the Lunar New Year holiday.
Ride-hailing giant Grab is full of surprises these days. It was not so long ago that the Singaporean decacorn was said to be considering a tie-up with its rival Gojek. Gojek instead is moving to merge with e-commerce giant Tokopedia while Grab is taking the SPAC merger road to an exit. The forthcoming Nasdaq SPAC could value Grab at up to US$40 billion, but it is not the only listing the company is considering. Indeed, Grab is also considering a secondary listing on the Singapore Exchange (SGX).