New IPO aspirants signal renewed listing activity on SGX

[SINGAPORE] A fresh burst of initial public offering activity hit the Singapore Exchange (SGX) on Tuesday (Jun 30), with two companies filing preliminary prospectuses for mainboard listings.

Logistics solutions provider All-Link Air & Sea and electrical infrastructure specialist EGP Energy Corporation became the latest companies to kickstart the listing process, following Temasek-backed Foundation Healthcare’s preliminary prospectus filing a week ago.

There is a practical regulatory driver behind the clustering of these IPO filings. Companies with a Dec 31 financial year-end are generally incentivised to lodge preliminary prospectuses by Jun 30, as lodgments made more than six months after the financial year-end require interim financial statements to be included as well.

Separately, Blackstone-backed data centre operator AirTrunk is reportedly preparing to file for a Singapore real estate investment trust listing as early as this week. The proposed US$1.5 billion offering, first reported in April, could be Singapore’s largest IPO since 2017.

This latest flurry of IPO activity points to continued momentum in Singapore’s equity capital markets, supported in part by government measures to revitalise the local bourse such as S$6.5 million Equities Market Development Programme.

These latest offerings form part of a broader pipeline that has been building over the past several month,highlighted Ong Hwee Li, chief executive of SAC Capital. The investment banking firm acted as sponsor, issue manager and underwriter for several SGX listings, including the recent IPO of co-living operator The Assembly Place.

“We expect more companies to file for listing in the months ahead,” Ong told The Business Times. “For investors, this means a more active and diversified IPO market this year, with companies across multiple sectors coming to market.”

Yet, a robust IPO pipeline does not necessarily translate into stronger price performance, as reflected in the lacklustre post-listing share prices of companies that debuted in the first half of the year.

Post-listing rally

More than 30 companies were estimated to exploring listing on SGX at the start of the year.

SEE ALSO

Logistics solutions provider All-Link Air & Sea files preliminary prospectus for mainboard IPO

AirTrunk said to be near confidential filing for biggest Singapore IPO in years

EGP Energy Corporation lodges preliminary prospectus for mainboard IPO

BT understands that IPO aspirants have been actively engaging institutional investors ahead of their market debuts, as cornerstone participation is increasingly seen as critical in anchoring deals and boosting retail confidence.

However, midway through the year, only two mainboard primary listings materialised – JustCo and UI Boustead Reit – along with three Catalist listings.

Mainboard-listed flexible workspace operator JustCo debuted at S$0.94 per share last month, closing its first trading day at S$0.775. It has since declined further below its IPO price.

Veteran fund manager Terence Wong, founder and CEO of Azure Capital, said a range of factors determine whether IPO aspirants can deliver a sustained post-listing rally, with investor engagement playing a key role.

He noted that post-listing, some companies go “radio-silent” and investors do not receive any updates.

“They should reach out to investors and update them on what is happening,” said Wong. “You need to keep the interest alive with updates on the company, perhaps once a quarter, or whenever there is something meaningful,” he said.

Wong added that maintaining visibility helps build credibility over time and supports longer-term liquidity. He has also observed that management teams often raise concerns post-listing when initial performance gains taper off and momentum fades.

“There are many companies out there vying for limited capital so you do need to get out there to gain prominence,” he said.

Listing considerations

Commenting on JustCo’s post-listing performance, Wong said issuers may many fear a similar outcome, particularly for sizeable offerings.

However, they need to consider that recent market conditions and investor sentiment may also have contributed to the weaker performance, alongside company-specific factors.

Nevertheless, “there will be companies that will interest investors, which will allow them to do a lot better”, said Wong. “If you look at those companies that have smaller a float, they typically do better than those with the bigger ones, at least for this year.”

In addition, some observers said that post-listing share price performance should not be overinterpreted.

Whether a company’s share price rises or falls after listing, or experiences a so-called “dead-cat bounce” following a strong debut, should not be of primary concern, said corporate finance lawyer Robson Lee, partner at Kennedys and director at Legal Solutions.

“The raison d’etre for seeking a listing must be the primary objective of raising public equity to fund the long-term growth of the business,” he said. He added that the growth and profitability of the company’s business must be sustainable.

However, there seems to be some hesitation to list, even as corporate finance houses are busier than a year ago. Wong attributed this partly to geopolitical uncertainty. He added that small caps have also not done well in recent months, and IPOs more broadly have underperformed.

Against this backdrop, once All-Link Air & Sea, EGP Energy and Foundation Healthcare together with AirTrunk come to market, their performance will be closely watched.