This article first appeared in Capital, The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

MALAYSIA’s number of initial public offerings (IPOs) reached its highest level in 2024 since 2005, leading regionally in terms of the number of deals. In 2005, Malaysia’s IPO count stood at 79.

This resurgence was largely driven by the listings of 99 Speed Mart Retail Holdings Bhd (KL:99SMART), Keyfield International Bhd (KL:KEYFIELD), MKH Oil Palm (East Kalimantan) Bhd (KL:MKHOP) and Johor Plantations Group Bhd (KL:JPG).

A total of RM7.42 billion has been raised through 55 IPOs so far this year, beating the previous year’s total of RM3.58 billion in funds raised through 32 IPOs.

In fact, certain weeks accommodated a flotation exercise almost every day. During the week of Nov 11 to 15, four companies debuted on Bursa Malaysia — Mega Fortris Bhd (KL:MEGAFB), Azam Jaya Bhd (KL:AZAMJAYA), Life Water Bhd (KL:LWSABAH) and Metro Healthcare Bhd (KL:METRO).

Another stretch that saw four listings was the week of Dec 16 to 20, in which Topvision Eye Specialist Bhd (KL:TOPVISN), Vanzo Holdings Bhd (KL:VANZO), Carlo Rino Group Bhd (KL:CARLORINO) and Winstar Capital Bhd (KL:WINSTAR) listed on the ACE Market.

The boom in new market listings in 2024 has been primarily driven by a higher number of listings on the ACE Market. As at Dec 20, ACE Market listings accounted for 73%, or 40 of the total 55 companies, while 20%, or 11 companies, were Main Market listings. In comparison, there were 24 ACE Market listings and seven on the Main Market in 2023.

The remaining four IPOs were LEAP Market listings versus one in 2023.

The 40 ACE Market listings were the highest number ever recorded since the inception of the board, formerly known as the MESDAQ Market, in 2009.

Data from Bursa Malaysia shows that the 55 IPOs this year contributed a total market capitalisation of RM31.37 billion to the local bourse based on their IPO prices, a 130% rise compared with 2023.

“Bursa has done well [and] I’m very happy to see the number of IPOs this year. A total of 55 IPOs tells of a significant growth that has surpassed my expectation. Subscription rates for the counters have been good. The quantum of successful IPOs this year has certainly encouraged [more] companies to seek a listing on Bursa,” M&A Securities Sdn Bhd managing director Datuk Bill Tan Choon Peow tells The Edge.

“The number of IPOs we undertook was well within our expectations and all performed well,” he adds.

Notably, news of KK Supermart & Superstore Sdn Bhd eyeing a flotation exercise swirled after 99 Speed Mart became the country’s largest IPO in seven years by raising RM2.36 billion on the Main Market, including RM1.7 billion from an offer for sale of 1.028 billion shares by founder and CEO Lee Thiam Wah and his wife Ng Lee Tieng. Shares in 99 Speed Mart debuted on Sept 9 at RM1.88, an 18% premium over its IPO price of RM1.60. On Dec 20, the counter closed at RM2.45, valuing the company at RM20.58 billion.

“The successful listing of 99 Speed Mart has been especially encouraging to other retail players. [As you know], KK Supermart has also been [mulling] a listing on the Main Market,” Tan remarks.

Other major listings on the Main Market included that of offshore accommodation services provider Keyfield International and palm oil producer MKH Oil Palm in April, and integrated plantation company Johor Plantations in July, which raised RM188 million, RM155 million and RM735 million respectively from their flotation exercises.

Deloitte in its Southeast Asia IPO Snapshot 2024 report says new listings skewed towards smaller deal sizes, underpinned by new listings on the ACE Market.

“Noteworthy listings included [ACE Market-listed] Alpha IVF Group Bhd (KL:ALPHA), an industry leader in fertility care specialist services operating in Malaysia and Singapore, and [Main Market-listed] Prolintas Infra Business Trust (KL:PLINTAS), a landmark transaction for the Malaysian equity market as it is the first-ever Islamic business trust IPO to be listed on Bursa since the introduction of the Business Trust Guidelines by the Securities Commission Malaysia (SC) in 2012,” says Deloitte. It also highlights the IPO of Feytech Holdings Bhd (KL:FEYTECH) on the Main Market in May, which raised US$43 million (RM193 million) and had an IPO market cap of US$143 million.

Of the 40 ACE Market IPOs, Steel Hawk Bhd (KL:HAWK), Carlo Rino and Metro Healthcare were graduations from the LEAP Market transfer framework after the companies met requirements including having an aggregate net profit of at least RM20 million and a net profit of at least RM6 million for the recent financial year.

“With the better economic outlook, I [foresee] more [LEAP Market] companies transferring to the ACE Market. In fact, I look forward to seeing more direct listings on the ACE Market [next year],” says Areca Capital Sdn Bhd CEO Danny Wong.

According to Deloitte, the IPOs that flooded the local bourse this year put Malaysia ahead of its Southeast Asian peers, leading by IPO count, funds raised and market cap. The number of companies going public this year has already surpassed Bursa’s initial target of 42.

Based on their IPO prices, the 55 IPOs in 2024 contributed a total market cap of RM31.37 billion — the highest since 2017 — a 130% rise from the figure for the entire 2023 period and the highest recorded since 2013.

Deloitte, however, notes that the region saw a decline in IPO activity compared with the previous year, largely due to a lack of blockbuster listings. Southeast Asia’s IPO market saw 67 IPOs in the first half of this year, a 21% decrease from 85 IPOs a year earlier. It recorded another 78 IPOs in 2H2024.

Correspondingly, there was a sharp decrease of 71% in market cap to US$5.8 billion and a 59% decrease in amount raised (US$1.4 billion) compared with US$3 billion in 1H2023.

“Only one large IPO, with a market cap of more than US$1 billion, had raised more than US$200 million in 1H2024 compared with three large IPOs that raised more than US$600 million each in 1H2023,” Deloitte observes.

Deloitte adds that the Malaysian IPO market saw oversubscription rates of more than 200 times, supported by active investor participation, especially from foreign investors.

“Political stability, improved sentiments and interest rate cuts by the US Federal Reserve have encouraged equities, hence [we can be] more confident of new IPOs. I expect a similar trend in 2025 as the US rates will continue its downtrend, alongside better corporate earnings prospects. The recent good take-up rates and performances of IPOs are always a confidence booster for new flotation exercises,” Areca Capital’s Wong says.

In May, the SC released a 93-page roadmap entitled “Catalysing MSME And MTC Access to the Capital Market: 5-Year Roadmap (2024-2028)” aimed at strengthening the capital market as an attractive and robust source of financing for micro, small and medium enterprises (MSME) and mid-tier companies (MTC).

“With the heightened interest in IPOs by both companies and investors, as well as the impressive valuations being achieved in Malaysia, there is huge potential for Bursa to become an attractive listing destination for regional companies. The investment theme in Malaysia continues to focus on the government’s implementation and execution, and fine-tuning of government policies to attract foreign direct investment, and increase investments in renewable energy following the announcement of the government’s New Industrial Master Plan and National Energy Transition Roadmap,” Deloitte Malaysia says.

Pledges towards a stronger capital market environment include the SC’s and Bursa’s joint commitment to an expedited three-month approval period for IPOs from March 1. “This is premised on the principal advisers/sponsors satisfactorily addressing the regulators’ queries and comments on the IPO application within five working days,” says Deloitte Malaysia.

In addition, the SC has introduced an accelerated transfer process to facilitate the promotion of sizeable and qualified ACE Market companies to the Main Market effective Jan 1 this year, conditional upon fulfilled criteria including a daily market capitalisation of at least RM1 billion for the past six months and meeting the profit requirements.

For the years of assessment of 2023 to 2025, listings of eligible, technology-based companies on all three boards on Bursa are eligible for a tax deduction of up to RM1.5 million on the listing costs of fees to authorities, professional fees and underwriting, placement and brokerage.

Given Bursa’s outperformance this year as well as how the 55 IPOs surpassed Bursa’s target of 42 IPOs in 2024 and even the envisioned 50 in 2025, all eyes will be on the performances of the new batch of IPOs in the new year for how they will help to bring Bursa to new heights. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.