Large Southeast Asian initial public offerings are expected to more than double this year as investors scouring for Asian bargains eye a fresh wave of privatisation's, say investment bankers.
They are working on a slew of state asset sales, from airports in Thailand and palm plantations in Malaysia to banks in Indonesia as governments rush to cash in on better investor sentiment.
"The markets are definitely right at the moment for privatisation's. The question is how many can get out during this window," said Richard Seow, managing director at Citigroup in charge of Southeast Asia investment banking.
The biggest issues expected this year include the Electricity Generating Authority of Thailand (EGAT), Malaysian state landowner Federal Land Development Authority (Felda) and Malaysian mobile operator Celcom.
Bankers are also working on plans for Singapore's second phone company StarHub and Indonesia's top mobile operators Telkomsel and Satelindo.
Even the outbreak of bird flu in the middle of last month, which hit markets in Thailand and Indonesia the hardest, has not dampened the appetite.
"Investors are just sitting and waiting. There is a sense that bird flu can be addressed," said Eric Varvel, managing director for investment banking in Asia Pacific at Credit Suisse First Boston (CSFB).
"Privatisation's in the region will go ahead. There is renewed interest in Southeast Asia," he said. "On a global basis, valuations are still very attractive and trail their global comparable."
The Thai market, despite more than doubling in 2003, is trading at a combined price to forecast earnings multiple of 11.9, while Malaysia is trading at 15.4 and Singapore is at 15.6. All are below Hong Kong's 16.6 and Tokyo's 19.9 .
CSFB is handling the Airports of Thailand PCL (AOT) sale, which is seen raising up to $500 million in the first quarter. CSFB topped the league tables in 2003 for Southeast Asia equity issues, handling deals worth a total of $1.83 billion, according to Dealogic.
Bankers said investor interest was definitely helped by the stellar performances of emerging markets such as Thailand, which was the world's best performing stock market with a rise of 116 percent, and Indonesia, which jumped 62 percent. Even Singapore, considered a developed market, rose 32 percent.
Most of the growth was driven by individual investors, who account for as much 90 percent of the volume in Thailand and 60 percent in markets such as Malaysia and Singapore.
Last year, new issues from Southeast Asia made up about 14 percent of the total $68.8 billion in Asia, even though the $9.8 billion raised was double the previous year.
Bankers expect the number of large IPOs in Southeast Asia to more than double in 2004, with the amount raised being sharply higher than the $1.7 billion raised in 2003 from offerings of more than $300 million.
Varvel said Southeast Asia had been overlooked partly due to large issues coming out of China and a lack of big new issues.
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