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Tech entrepreneurs see SGX as attractive IPO destination

There's liquidity in the bourse, and sufficient investor appetite here for "disruptive" companies, says SGX's Chew Sutat
Saturday, May 27, 2017 - 05:50

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Singapore has a relatively global investor base, and institutional investors who are keen to bet on startups.

Singapore

SINGAPORE Exchange (SGX) is still an attractive option for homegrown tech startups or "disruptive" companies that are considering an IPO (initial public offering), the SGX-CIMB Disruptors' Day concluded on Friday.

The event, co-organised by SGX and CIMB Securities, is a first-of-its-kind engagement event to connect investors and corporates with tech startups and companies with "disruptive" business models.

Darius Cheung, chief executive officer (CEO) of property search portal 99.co, told a media briefing at the event that a listing on SGX will appeal to local firms.

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The serial entrepreneur said: "As a property tech company, our audience is very local. In Singapore today, we have a 65-per-cent consumer brand awareness. Listing in Singapore has a very strong attraction for us."

Chew Sutat, head of equities and fixed income at SGX, added that there is liquidity in the local bourse, as well as sufficient investor appetite here for growth or "disruptive" companies.

"Hong Kong (Stock Exchange) has a market cap - in terms of listed companies - about eight times the size of Singapore. But the overall market trades about six times the size of Singapore. From a relative liquidity basis, Singapore is more liquid."

He said that Singapore has a relatively global investor base, and institutional investors "who like growth stories" and are keen to bet on startups.

The country's compactness makes it a good destination for IPOs, added Greg Mittman, chief operating officer of Internet service provider MyRepublic. "It's nice to know that if there is a problem, you can take a taxi and go across town (to resolve it)."

He pointed to Singapore as a launchpad for tech businesses, for it is one of the most advanced markets in terms of regulations, and its consumer tech-savviness is "24 months ahead of New Zealand and Australia".

MyRepublic is currently exploring an IPO, from which it is about 18 months away, Mr Mittman revealed. "We've started the process to look at exchanges. It's frustrating because there is no perfect venue. It's literally a process of deciding which poison you want to drink."

While Nasdaq presents "size issues" and is "very far away" for a firm that is based in Asia, Hong Kong "has an issue with being very Chinese-centric, so you run the risk of getting lost".

Mr Mittman added: "Singapore is not perfect - it has well-known issues. But again, there is no silver bullet."

Eric Loh, CEO of Trendlines Medical Singapore (TMS), acknowledged that a challenge faced by "disruptive" companies here is an absence of research coverage. But he said that the onus is on such companies to articulate their growth and business models to investors and research houses.

TMS is a medical technology (medtech) startup incubator of The Trendlines Group, an Israel-based, Catalist-listed incubator and the first such company to be listed on SGX.

Asked why Trendlines chose Singapore as a listing destination, Mr Loh said: "We look for fertile ground for innovation and at the overall environment. Singapore has the critical infrastructure (for medtech)."

Robert Lempka, CEO of online social trading platform Ayondo, said an IPO is about timing and sentiment. Of his fintech company (which is currently eyeing a listing on SGX), Mr Lempka said: "Clearly, there is a big drive in Singapore for fintech. There is no fintech listing (on SGX) for the time being ... and it can only be good for the stock if you are the first one."

Malcolm Koo, head of institutional equities sales (Asean markets) at CIMB Securities, said that it all boils down to IPO price. "If the price is right, there will be demand."

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