Although our country has a strong economy, Singapore hasn’t been a particularly attractive place for IPOs, the latest down the list being Sea’s preference for US instead.
Startups tend to list in Australia (ASX) instead, due to the perception that investors there are more tech-savvy, Channel News Asia reported. One reason is because local investors are more conservative, so small tech firms tend to not receive high valuations. Secondly, the SGX is considered attractive only for real estate listings (REITs).
But that is not entirely true.
According to Chew Sutat of SGX, there are over 80 tech companies on SGX with a market capitalisation of S$80 billion (compared to REITs’ S$75 billion).
In order to address the discrepancy in perception, the SGX has launched initiatives like investor education workshops to help tech startups list. In addition junior board Catalist allows companies to list their shares at higher prices with scarcity premiums.
And yesterday, the Singapore Exchange (SGX) and Info-communications Media Development Authority of Singapore (IMDA) signed a new memorandum of intent to up the game even further.
Boosting Singapore’s Attractiveness
This new MOI wants to help IMDA-accredited companies leverage on “private and public capital markets” – meaning that it would be easier for them to enter said markets.
SGX and the Accreditation@IMDA programme will help identify and galvanise “key parties in the financial ecosystem to support the companies in their IPO journey.”
These key parties include IPO sponsors, and law and audit firms who can help “lower information barriers and costs for companies.”
Said SGX CEO Loh Boon Chye, this collaboration “will foster a keener appreciation among Singapore technology firms of our capital markets as a source of funding, and offer them the potential of expanding their business into the broader region.”
In addition, interested startups will receive support with pre-IPO funding, advice on the listing process and help in getting prepared.
Companies Who Stand To Gain
The focus will be on companies in A.I. and data science, cyber security, immersive media and the Internet of Things.
“I encourage ICM (infocomm) companies with innovative products and services to set up their base of operations in Singapore so that they can take full advantage of these programmes and platforms,” says Minister Yaacob Ibrahim.
This sentiment was echoed by chief executive at IMDA, Tan Kiat How. He described Singapore as a place of immense opportunity as economise continue digitising.
“[This] partnership is an important step in deepening the collaboration between the technology and financial ecosystems, and enables both groups to benefit from this rapid growth.
Will It Work?
“Singapore is very much about having companies that have strong fundamentals, not about risk,” quoted Dinesh Bhatia, CEO and founder of tech company SportsHero.
While he commends SGX’s effort to re-engineer itself, the onus is on investors to change their mindset. In terms of embracing risk and disruption, we are not there yet either as Singapore is considered to be a “safe haven [that is] all about dividend plays.”
Unlike Australia, who boasts a history of risk-taking entrepreneurs, we still have a ways to go.
Featured Image Credit: SGX