There are few signs the bull market in IPOs will cool anytime soon. In Thailand, public offerings now in the pipeline are expected to raise $1.7 billion by yearend, according to J.P. Morgan Chase & Co. (JPM
), on top of the $1.2 billion companies have already raised through 14 IPOs, making Thailand the region's leader. The total would equal 3% of the Thai market's current $90 billion capitalization. Malaysia is hot on Thailand's heels with $676 million from 45 IPOs. "We're catching up," says Nazir Razak, chief executive of leading Malaysian bank CIMB. It underwrote 10 IPOs this year, including the largest so far -- a $408 million deal for the Astro pay-TV network. CIMB itself went public in January, raising $60 million.CHANGED MARKETS
Why the sudden fervor? Investors are bullish about the prospects for corporate earnings in Southeast Asia, where growth is being led by rising domestic consumption. Plus, balance sheets are healthier. In Thailand the average net debt-to-equity ratio at publicly traded companies is 1:1, a big improvement from 4:1 back in 1996. While soaring debt loads and overvalued currencies helped tip the region into financial crisis a few years ago, investors have put that behind them. In U.S. dollar terms, Thailand's bourse is up 104% since Jan. 1, and even Indonesia's exchange, the region's most volatile, is up 58%. Some say there's still upside potential. "It's a year or two too early to talk about a bubble," says Sriyan Pietersz, head of research at J.P. Morgan Securities Thailand in Bangkok. "The markets have changed since the crisis."
Skeptics believe the rally is overdone and that few newly listed companies are good long-term bets. "There's very little of quality that we'd be absolutely comfortable with," says Hugh Young, managing director of Aberdeen Asset Management Asia Ltd. in Singapore. "The markets should pause for breath and let reality catch up."
Another wave of public offerings is expected over the next several months as state-owned enterprises are privatized. It helps that countries like Malaysia and Thailand create obstacles for local investors who want to buy foreign securities. But captive or not, investors are making it harder for corporate execs in Southeast Asia to resist taking their companies public. By Michael Shari in Singapore