Asia Capital Markets Research

After years of raising funds in private markets, Southeast Asia’s largest platform companies are suddenly eager to exit. The region’s foremost super app rivals are leading the pack, but the exit routes vary considerably. Grab is making SPAC history with the largest ever such deal, on the Nasdaq. Not to be outdone, Gojek and Tokopedia are moving to finalize their expected merger, which will likely include a listing both in New York and on Indonesia’s own stock exchange. The combined entity, the aptly named “GoTo,” could attain a valuation of US$30-$40 billion. 

Grab is heading for the exit ramp SPAC style. IPOs are slow, costly and let regulators hold a magnifying glass to a firm’s balance sheet. Less so with this SPAC on the Nasdaq, which will give Grab a high valuation (US$40 billion) and investors a way to cash out. Grab has been operating for about nine years. The merger will include roughly US$4.5 billion in cash, the largest share sale yet by a Southeast Asian firm in the U.S.

Hong Kong's IPO market picked up in the first quarter right where left off in 2020, soaring to a new high in terms of overall proceeds, according to KPMG. Deals raised on the Hong Kong Stock Exchange totaled US$13.9 billion. The nixed Ant Group deal last October has sidelined most fintech listings but not the rest of what KPMG describes as "innovation companies," notably biotechs.

Heading into 2021, Indonesia's prospects for fintech investment were looking pretty good. Among Asia's key emerging markets, Indonesia checks all the right boxes. It is huge, relatively open to foreign investment, has a fast-growing economy (hindered by the pandemic for now, but certain to rebound sharply) and has a large unbanked population. With most Indonesians new to retail investing, fintechs see a strong opportunity to get in on the ground floor. Since January, several Indonesian online investing startups have closed successful funding rounds.

After umpteen funding rounds and nearly nine years in operation, Grab is finally heading for the exit ramp. The question is, will the Singaporean decacorn choose to go public the usual way or do something different? Until the past few weeks, a standard IPO in New York looked like the obvious choice. But with the current SPAC (special purpose acquisition company) craze, Grab might decide to hop on the bandwagon.

Hong Kong's IPO market has been almost unstoppable in 2020. Neither the worst pandemic in a century nor the nixing of Ant Group's long-anticipated blockbuster debut have been able to dampen market sentiment for long. To be sure, fintechs have shelved plans to list in Hong Kong, but there are many other Chinese companies unaffected by the microlending crackdown eager to go public in the former British colony. In fact, while the fintech unit of JD.com will likely delay its listing indefinitely, JD's health unit is set to raise US$3.5 billion.

Hong Kong's future as a financial center is increasingly centered on mainland China. That's a boon for the city's capital markets, among the world's best performing in a difficult year. From January to July, Hong Kong IPOs raised US$87.5 billion, up 22% year-on-year, buoyed by a flurry of Chinese tech and biotech listings. While that tally is impressive, the best is yet to come. Ant Group's dual-listing IPO in Hong Kong and Shanghai is expected to raise US$35 billion, half in each city. The IPO is likely to occur before the U.S. presidential election on November 3 to eschew possible market volatility.

The Hong Kong IPO market's hot streak shows no sign of slowing down, despite political turmoil and the pandemic-induced downturn. The reason is simple: Whatever changes come in Hong Kong, Chinese firms are prepared for them. After all, the firms listing on the HKEX are all based on the mainland. At the same time, China's economy is gradually recovering. Business activity is picking up.

Investors appear to have adjusted to a new normal in Hong Kong, one characterized by political unrest and economic uncertainty. As the coronavirus ebbs, protests are returning to Asia's preeminent financial hub. The former British colony remains mired in a steep recession. And yet, large Chinese tech firms are pushing ahead with initial public offerings and secondary share listings on the Hong Kong Stock Exchange. At the current rate, Hong Kong could be the world's hottest IPO market in 2020.

The past year has been one of the hardest in memory for Hong Kong, which has been in recession since the fourth quarter of 2019. While the city has contained the coronavirus relatively well, it still faces political turmoil with no end in sight. You wouldn't know that from the state of its IPO market though, which had the most new listings among all stock exchanges in the first quarter and is gathering momentum faster in the second quarter than any other major index.

The Hong Kong IPO market has picked up considerably since early May. Suzhou-based biotech firm Peijia Medical listed on the HKEX on May 15, raising HK$2.3 billion (US$302 million) that it will use to develop its product pipeline of heart valve and vascular repair devices. Peijia Medical's shares jumped 74% in its first day of trading, the best debut performance this year so far for an IPO over US$50 million.

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