Battle for IPOs heats up among regional exchanges

Philippines, Indonesia aiming to cut tax rates for firms; HK set for boost from beer maker

HONG KONG • The battle to attract initial public offerings (IPOs) is heating up among South-east Asian exchanges.

The Philippines is trying to pass a law that will cut taxes on stock transactions, in a bid to encourage more IPOs in the country, following Indonesia's proposal last week of a similar tax cut.

Under the Philippine proposal, passed by the House of Representatives on Monday, the transaction tax rate on listed stocks will be gradually reduced from 0.6 per cent to 0.1 per cent in 2024, and the tax on interest income will be cut from 20 per cent to 15 per cent.

Philippine Stock Exchange president Ramon Monzon said: "We can look forward to the growth of our capital markets as they become competitive with regional peers in terms of friction costs."

The Bill still needs to be passed by the Senate to become law.

Indonesia proposed a similar tax cut targeted at IPOs last week, in which listed firms would enjoy a lower-than-normal 17 per cent corporate tax rate in the first five years following their IPOs.

The Philippines has seen only one IPO so far this year, although home supplies retailer AllHome Corp is currently meeting investors over a US$344 million (S$473 million) IPO and Metro Pacific Hospital is seeking approval for an IPO that could raise as much as US$1.6 billion, which would be the country's largest on record.

Still, the size of the Philippine and Indonesian markets pales in comparison to that of larger stock exchanges such as in Hong Kong.

  • Some upcoming listings

  • • Shanghai Henlius Biotech on the Hong Kong exchange, with a size of up to US$477 million (S$656 million)

    • Topsports International Holdings on the Hong Kong exchange, with a size of about US$1 billion

    • Lendlease Global Commercial Reit on the Singapore Exchange

    • AllHome Corp on the Philippine exchange, with a size of up to US$344 million

    • Asset World on the Thai exchange, with a size of up to US$1.6 billion; listing date is Oct 10

    • Bhakti Agung Propertindo on the Indonesian bourse, listing date is Sept 16

South-east Asian IPOs combined have raised less than half of Hong Kong's US$10.8 billion this year, data compiled by Bloomberg shows.

Singapore leads South-east Asian countries with a deal value of US$1.67 billion this year, followed by Thailand's US$720 million.

Singapore and Hong Kong both changed their listing rules last year to allow companies with dual-class share structures to list on their exchanges as they vied to draw the next big technology IPOs away from New York.

While the political unrest in Hong Kong has dampened enthusiasm, things might be looking up for the financial hub. Anheuser-Busch InBev is understood to be planning to raise about US$5 billion from a revived float of its Asian operations, Reuters reported yesterday.

This comes after the world's largest beer maker shelved a Hong Kong IPO in July.

AB InBev, which had aimed to raise as much as US$9.8 billion through an IPO of Budweiser Brewing Company APAC to help with its heavy debt burden of over US$100 billion, aims to relaunch the float as soon as next week, sources said.

The listing would be a boost for the Hong Kong stock exchange after Reuters reported last month that China's biggest e-commerce company, Alibaba Group Holding, had delayed a Hong Kong listing worth up to US$15 billion amid growing political unrest there.

"The market conditions in recent days have improved and provided a good window... we should seize the opportunity to go ahead," said one of the sources.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on September 13, 2019, with the headline 'Battle for IPOs heats up among regional exchanges'. Print Edition | Subscribe