Singapore IPO market's prospects brighten but no quick fix in sight

© Reuters. FILE PHOTO: A man wearing a protective face mask walks past the Singapore Exchange (SGX) which stays open during "circuit breaker" measures to curb coronavirus COVID-19) in central business district area in Singapore, April 7, 2020. REUTERS/Edgar Su

By Anshuman Daga

SINGAPORE (Reuters) - Singapore's move to launch new funds to support startups will help companies seeking IPOs, though it could take years before Singapore Exchange (OTC:SPXCY) might become a centre for regional tech listings, according to market players.

Despite shaping up as one of Asia's leading finance hubs, Singapore has seen a decline in listings over the past decade and failed to attract large initial public offerings.

Market participants say, though, that the setting up of two funds with S$2 billion ($1.5 billion) in capital for firms' late-stage fundraising and IPOs, coupled with blank-check companies being allowed to list in the city-state, will attract more startups to list there.

"The value proposition by the Singapore eco-system to founders and shareholders of high-growth businesses is that it will be a part of the company's journey - before, during and after the IPO," said Ho Cheun Hon, head of Southeast Asia equity capital markets at Credit Suisse (SIX:CSGN).

"This should resonate with some founders and entrepreneurs, particularly the unicorns who are starting to think about public listings."

The city-state has a long way to go.

So far this year, up to September 16, just three companies have listed on Singapore Exchange (SGX), raising $239 million, according to data from Refinitiv. The amount raised is less than half the figure from the same period last year and the lowest level in six years.

By comparison, funds raised on the Malaysian bourse stands at $531 million, the Indonesian and Philippines exchanges have each attracted $2.3 billion, while the Thai bourse has topped $3.5 billion.

As Southeast Asian tech dealmaking booms, Singapore is looking to attract more attention after some major companies chose to list elsewhere in recent years.

Singapore-based gaming and e-commerce firm Sea listed in the United States in 2017, for example, and is now valued at $182 billion. Southeast Asian ridehailing and delivery firm Grab is also listing in the United States, via a blank-check firm, while gaming firm Razer debuted in Hong Kong in 2017.

Vinnie Lauria, a founding partner at Singapore-based Golden Gate Ventures, welcomed the government's attempts to foster startup success.

"This is another example of Singapore using capital and smart government programs to promote itself as the hub for Southeast Asia startups."

Robson Lee, a partner at law firm Gibson, Dunn & Crutcher LLP, said the Singapore market has the potential to "punch above its light weight by being better organised and coordinated to attract unicorns and high technology global corporates".

($1 = 1.3507 Singapore dollars)