When market observers lament about low IPO numbers and post-listing trading interest, they often overlook the fact that many companies do want to list and do need the capital. They also want to be priced fairly by the market.
What professional services firm Forvis Mazars has observed is telling. It helped audit Niks Professional, one of the six companies that eventually listed last year. However, two other listing aspirants that had similarly engaged Forvis Mazars chose to abort at the final stages. “One is from the construction industry, and the other is from the IT industry. Both are due to low valuation issues,” says Ooi Chee Keong, partner and head of capital markets for Forvis Mazars in Singapore.
The latest IPO to pull the plug is LYC Medicare, a subsidiary of Malaysia-listed LYC Healthcare, citing “prevailing market conditions in the Singapore equity market”. LYC Medicare had already filed its draft prospectus for a Catalist listing and will now consider other exchanges instead, said the parent company in a market announcement on June 12.
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Nonetheless, the pipeline seems pretty busy, suggesting that if and when conditions become more conducive, there could be a flurry of listings. According to Ooi, the firm has signed two new mandates this year and together with the five that it is already working on, that is a total of seven potential listings, coming from the media, tech, IT, construction, manufacturing and F&B sectors.
Meanwhile, the market remains moribund. Earlier discussions by participants to revive the market had complained about the lack of a “blockbuster” listing, which Singapore as a regional hub for fast-growing Asia was supposed to capture, before Hong Kong swooped in and pulled far ahead with support from China, its natural hinterland. The focus then turned to capturing those tech unicorns when the start-up craze fuelled by VC (venture capital)- and PE (private equity) was in full swing. That too faded with one “getaway” after another.
The last sizeable “tech” listing was that of Nanofilm Technologies International MZH in late-2020 when it raised more than $510 million from an overly excited community. When earnings did not grow at the expected trajectory, interest promptly dissipated. For a while, things were kept going by a constant stream of REITs. However, when interest rates shot up, that segment died down as well. The last REIT to list here was Digital Core REIT back in December 2021, right after Daiwa House Logistics Trust DHLU a fortnight earlier.
A trickling of small companies went ahead over the last couple of years but their post-listing performance has been nothing to shout about. Quite a few did not even bother with a retail tranche, signalling quite clearly they are fine with a cosy group of investors. Singapore Institute of Advanced Medicine Holdings is the only IPO thus far this year. It last traded at 11 cents on June 11, down from its offer price of 23 cents.
The handful of IPOs stood in contrast to the spate of delistings, when, in an all-too-familiar plot by now, controlling shareholders, sometimes with support from private funds smelling a good bargain, offer to privatise their companies at what critics inevitably would say are prices unfair to minorities. The most recent privatisation attempts are Oversea-Chinese Banking Corp’s for subsidiary Great Eastern Holdings G07 and the bid by the family of president-candidate aspirant George Goh to take their company Ossia International O08 private.
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Meanwhile, a steady stream of Singapore companies went ahead to IPO on the Nasdaq despite knowing that some of them would struggle to hold market interest. Besides big tech names the likes of Grab Holdings and Sea, they include OhmyHome, which is down 85% since its listing; JE Cleantech Holdings, which listed at US$4 ($5.4) in April 2022 and shot up to US$57 almost right away but dropped to 92 US cents on June 11; and CytoMed Therapeutics, chaired by Singapore’s former “IPO King” Peter Choo, which listed last April at US$4 too and is now trading at just below US$2.
SGX has been actively engaging potential listings but for one reason or another, the “big one” is nowhere to be seen. Over the years, several candidates have flirted with a potential listing on the Singapore as they actively build their own profiles to woo a bigger potential money pool.
Carsome, based in Malaysia, has taken funding from both GIC and Temasek. However, it has yet to confirm if it is indeed listing here, despite active efforts from SGX, which included the unusual step of organising familiarisation visits to the company for media and analysts. Singapore-based Carro, which is in a similar business, has indicated it is heading to the US.
Biotech firm Mirxes, born out of the laboratories of A*Star and funded partly by EDB Investments and pandemic-related contracts, has stated its IPO intention for years but has kept its options open. In April, it eventually refiled its application to list in Hong Kong although the company has alluded to how it will consider a dual-listing back in Singapore. However, given its focus on China as the main thrust in its overall growth strategy at present, a Hong Kong listing will presumably give it the edge.
IPO candidates come from traditional sectors and not necessarily hot upstarts. Thai Beverage Y92 had wanted to spin off its beer business for a separate multi-billion listing but has put that off several times. Will the recent pick-up in sentiment help improve valuations and move things along? Mapletree Investments announced on April 12 the beefing up of its student accommodation portfolio by acquiring new assets from its associate company Cuscaden Peak for GBP1 billion ($1.7 billion). Will it revisit the student accommodation REIT if rates start easing?
Some market commentators have urged these “Singapore-based but already US-listed” entities to at least do a secondary listing back on the SGX. The two obvious targets are Nasdaq-listed Grab Holdings and Sea, which ended up on the New York Stock Exchange (NYSE). That call was not yet heeded by homegrown Ryde Group, which listed on the NYSE in March. In order to compete in the ride-hailing space dominated by Grab, Ryde is doing so with a different fee model. On June 7, it announced secondary listings on the Frankfurt and Stuttgart Stock Exchanges “to capitalise on the global investor base across different markets”.
For all the well-known issues regarding liquidity, Citi’s Udhay Furtado remains upbeat about what can be done with IPOs here. Before REITs became the mainstay of mainboard listings on the SGX, the exchange was able to attract other companies in semiconductors, logistics and consumer businesses. “There’s no reason why we can’t have good tech companies, hardware, consumer companies. As we see the IPO market open up, we will see another window of opportunity where interesting companies come back,” says Furtado, the bank’s co-head of Asia North/Australia and Asia south equity capital market origination and solutions.
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Singapore needs to build further on its “global competitive advantage” the way it has with REITs and build on that to attract listings across the region such as data centres and other types of real estate and infrastructure plays. “We have an interesting regime for that. I think we will start to see other companies come [here],” he says. “Singapore is a natural place for regional companies.”
Furtado maintains that Singapore has the right ingredients and people, and has already spent a lot of time working out the market framework to ensure ease of access. The key now is to replicate these advantages across sectors, whether in healthcare, energy transition or technology. “Most sophisticated money managers are Singaporean funds. This is an open global marketplace, and I hope we start to see more companies list in the market.”
reporting for all stories by Nicole Lim, Goola Warden, Felicia Tan, Douglas Toh, Jovi Ho, Samantha Chiew, Khairani Affifi Noordin and Chan Chao Peh
