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.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
SEMICONDUCTOR SERVICES: A company executive said that Taiwanese firms must think about how to participate in global supply chains and lift their competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to launch its first multifunctional service center in Pingtung County in the middle of 2027, in a bid to foster a resilient high-tech facility construction ecosystem. TSMC broached the idea of creating a center two or three years ago when it started building new manufacturing capacity in the US and Japan, the company said. The center, dubbed an “ecosystem park,” would assist local manufacturing facility construction partners to upgrade their capabilities and secure more deals from other global chipmakers such as Intel Corp, Micron Technology Inc and Infineon Technologies AG, TSMC said. It
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
RSS