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A few years ago, Shopee’s parent company, Sea Group, was one of the first SEA companies to be listed on the New York Stock Exchange (NYSE). Recently, TDCX, a Singaporean digital customer experience (CX) provider announced it has made it on the NYSE too.

Closer to home, MoneyLion’s Foong Chee Mun became the first Malaysian fintech founder to get an IPO on the NYSE. There have also been headlines around Grab, PropertyGuru, and similar tech giants heading towards the same goal.

These success stories have raised questions from SEA soonicorns (soon-to-be unicorns) who are striving for similar advancements too. In a Wild Digital SEA 2021 panel, Laurent Junique, founder and CEO of TDCX, shared his insights on how he knew his startup was ready to go public. 

He was joined by Andy Tai, the Managing Director of Goldman Sachs, and Delano Musafer, NYSE’s Head of Capital Markets in APAC, the team that helped TDCX get listed. 

Moderated by Kit Wong, CFO of Catcha Group, the discussion shed light on the benchmarks required of SEA startups to get their IPO listing. The panelists also explored the areas of consideration companies need to factor in before doing so.

But what’s so great about the NYSE?

The NYSE is known to be one of the “gold standards” for companies worldwide to get listed on. Other than the prestige it holds, companies who get their IPO on it are said to have better investment opportunities and higher liquidity, according to Delano.

Additionally, the NYSE is also unique in that it has human market makers on the ground that are assigned to look after the stocks of a few companies. They must even commit their own capital to support the stocks of their businesses, so investors and issuers have more confidence in their stocks. 

This incentivises the market makers to ensure their assigned companies are doing well. 

Kit added his two cents, “For what it’s worth, Catcha Group is also listed on the NYSE and part of it is because of the human element of the market making, having someone to speak to makes a difference.”

How to know your company is ready to list

Become a unicorn

Laurent kicked off the discussion with his experience on how he knew TDCX was ready for its IPO. Having scaled from 13 to 14K employees over 26 years, TDCX has grown from providing its customer experience (CX) solutions to only clients within Singapore to ones across SEA. 

Soon after, the team realised the potential for TDCX to capture the global market too, which led to Laurent’s decision to bring TDCX to the public market. 

Andy presented his points from a market cap perspective, stating that the rule of thumb for a company to know they’re ready for public listing is by first achieving unicorn status. Having a market cap of at least US$1 billion is helpful because it shows that a company is of a scale that investors would care about.

“By then, you’re too big for investors not to look at you,” said Andy.

Delano agreed, but disclosed that the NYSE’s listing standards only require a minimum market cap of US$200 million to receive an IPO, but achieving unicorn status is advantageous. 

Know your market fit

While IPOs are generally agnostic towards the kinds of companies that get listed, Andy stressed the importance for companies to know their total addressable markets and plans to grow from there. But first, a company must take a step back to review what their business is about and find out how they can serve the market, domestically or internationally. 

To illustrate his point, he pointed to the success of Indonesian marketplace, Bukalapak, which was listed domestically on the Indonesian Stock Exchange. He said that the company had a very strong understanding of its local market as reflected in its branding and internal systems.

Laurent chimed in with his on-the-ground experience. When choosing which exchange TDCX was going to be listed on, they were advised to look at which markets had the most industry peers in their sector, and found it in the US.

However, having more industry peers meant higher competition, which meant that TDCX needed to differentiate its story and offerings so it would stand out.

“Because we were coming from SEA, a high growth region, we had a unique proposition to investors. Now we didn’t just choose the US, we chose the NYSE, as we believe it’s important to have an exchange that’s driven for entrepreneurial support, which was spectacular there,” shared Laurent.

TDCX was also advised that the NYSE was a market that had more liquidity as well, and getting an IPO there would give the company access to global investors. 

“To give a number, the NYSE trades about US$150 billion every day, so it’s a huge pool of liquidity,” added Delano.

Have a solid business trajectory post IPO

The panelists pointed out that companies looking to go public must also set up their business trajectories. This includes the company’s future plans for fundraising that ties to the liquidity standpoint of the exchanges.

Laurent could relate to this, and recalled that TDCX actually postponed its listing when the pandemic hit in 2020. This was because the team didn’t have enough visibility into the future of how the company would be operating throughout the pandemic or in the new normal.

“We wanted to be better positioned to explain our story to investors. We didn’t want to be in a position where we didn’t know what to do,” he said. 

“You want to have confidence, and be able to project where the company is headed in the next quarters to come. You want to put your best foot forward.”

Preparing to go public

Get your paperwork in order

Based on Andy’s experience, companies generally underestimate the amount of effort and time needed for a company to go public. He further explained that the kick-off into the listing process involves hiring bankers, accountants, and lawyers to start the auditing and filing of necessary documents. 

This process typically takes 6-8 months before anything further can happen, such as marketing the company to investors. 

Andy advised companies looking to list to start thinking ahead and get their paperwork like financial statements and other documentation in order before even hiring the necessary professionals. 

“Bear in mind which audit standards you’ll be subjected to because the US and domestic exchanges have very different accounting standards,” he added. 

Get your team ready

Another thing a company needs to sort out on top of paperwork is its internal corporate governance. The team has to be mature enough and cognisant of the additional work beyond their day job. 

There’s a lot of work and commitment, not just when it comes to getting listed, but for the future as a public company, stated Laurent.

Be prepared for public scrutiny

Laurent shared that one major difference between being a listed company from a private one is the increased public scrutiny he’s now subjected to. As the company will now have to report its financial performance and projections each quarter, there will be an increase in administrative tasks, earnings reports, etc. 

I look at it from a perspective of becoming an adult and it’s a good effort for a company to be more structured, more organised, and more transparent to pave the way for future growth. It also makes us remember that going IPO is not the end of the journey, it’s the beginning.

Laurent Junique, founder and CEO of TDCX

If you’re not ready for the amount of work, don’t force an IPO unnecessarily

That was according to the speakers, who stated that there isn’t exactly a “bad time” to go public per se. However, bad outcomes can take place if a company and its team aren’t mature enough or ready for the amount of effort involved in being listed on an exchange.

Some of these examples can range from a listed company missing an earnings report, or not hitting its targeted outcomes, and staying stagnant.

This certainly points to the fact that companies looking to go public need to have a very solid understanding of their business, how it fits in the market, backed up with a strong and united team. 

“So that’s why I’m harping on the fact that companies should think about preparing for an IPO much earlier because those key areas take a lot of time to develop,” concluded Andy.

  • You can learn more about Wild Digital here.
  • You can read more on what we’ve written about Wild Digital SEA here.

Featured Image Credit: Laurent Juniquefounder and CEO of TDCX / Delano Musafer, Head of Capital Markets in APAC at NYSE / Andy Tai, Managing Director of Goldman Sachs

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