Singapore IPOs see 53% drop in funds raised in first half of 2021: Deloitte

SINGAPORE'S initial public offering (IPO) market saw a slowdown in activity during the first six months of 2021, with funds raised dropping 53 per cent on the year, according to a Deloitte report released on Friday.

The Singapore Exchange (SGX) saw three IPOs in H1 - two Catalist and one mainboard. Two of these listings - Aztech Global and Econ Healthcare (Asia), were relistings.

These IPOs, excluding secondary listings, raised S$337 million in proceeds and garnered an IPO market capitalisation of S$1.11 billion. Last year, the same period saw six IPOs with S$712 million proceeds and an IPO market capitalisation of S$1.19 billion.

The SGX also welcomed the secondary listing of glovemaker Sri Trang Gloves Thailand in May 2021. Deloitte said the Singapore bourse's secondary listing platform appeals to companies that are based in South-east Asia and listed in the US.

The South-east Asia region saw a 28 per cent rise in IPOs, achieving 59 in H1 2021 compared with 46 in H1 2020. Prominent listings include PTT Oil and Retail Business Public Company in Thailand, as well as Monde Nissin and Megaworld Corporation in the Philippines.

Compared with H1 2020, IPO proceeds and market capitalisation both doubled in H1 2021 respectively to US$5.97 billion from US$2.61 billion, and to US$22.44 billion from US$11.23 billion.

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Tay Hwee Ling, Deloitte South-east Asia and Singapore disruptive events advisory leader, noted that many of these companies come from consumer-based businesses where the local brand holds great value within the local investor market.

"Should they cross over to the US market, they may not receive the same level of attention as US investors may not be familiar with them. While there is healthy competition, the exchanges each have a niche and a competitive advantage within their local markets," she added.

The Covid-19 pandemic has also created new opportunities for growth sectors - not just traditional tech. Consumer businesses, including those in the food and beverage, and service industries, will be needing funds to tap opportunities and differentiate themselves from competitors, Ms Tay said.

"Many of these companies seeking new funds are looking to expand their capacity instead of just acquiring additional working capital. There could be potential opportunities for companies to go into mergers and acquisitions, buying over smaller competitors in the market," Ms Tay said.

Deloitte also noted growing interest in special purpose acquisition company (SPAC) listings, amid the global pandemic causing "extreme market volatility".

Ms Tay said that SPAC listings have attracted interest in major markets due to their speed to market and ability to offer price certainty in valuing target companies. They "provide an additional option to listing aspirants to tap on the capital market for their business needs and we expect to see interest from investors in the region".