Reits, business trusts to continue to drive IPOs on SGX: PwC report

LISTINGS of real estate investment trusts (Reits) and business trusts (BTs) will continue to dominate the initial public offers (IPO) on the Singapore Exchange (SGX), according to a PwC report.

The report titled, "Equity Capital Markets Watch - Singapore: 2017 year in Review" said that Reits and BTs will likely continue to be the niche for the SGX.

"The year 2017 was a brilliant one for IPOs in Singapore. With the market upturn, we see that real estate investment trusts (Reits) and business trusts (BTs) continue to dominate the market making up 88 per cent of total funds raised," said Tham Tuck Seng, PwC Singapore's Capital Markets leader.

Since 2015, the SGX has seen eight listings of Reits and BTs, raising a combined S$6.6 billion in gross proceeds and accounting for 85 per cent of the total IPO funds raised over the past three years.

The SGX may also see more listings of food and beverage (F&B) companies this year given "the impressive performance of F&B counters in 2017, coupled with the cash business and nature of these companies". Last year, three F&B companies were listed. Newly-listed Kimly, RE&S Holdings and No Signboard Holdings raised some S$90.3 million in total gross proceeds.

However, the SGX could face challenges in attracting technology companies to list here given that rivals including Nasdaq and the New York Stock Exchange offer attractive valuations.

"In addition, SGX is also up against competition from private equity firms and individual investors that offer alternative funding opportunities," the report said.

The SGX is also expected to face more intense competition from the Hong Kong Stock Exchange (HKEx), which is seen to offer higher valuations and liquidity. Already, the number of Singapore-based companies listed on the HKEx has more than doubled in the past year, to 13 in 2017 from six in 2016. PwC foresees that in 2018 local companies will continue listing on the HKEx.

Last year, the SGX saw a total of 20 IPOs with seven listings on the mainboard and 13 listings on the Catalist board in 2017.