Temasek, MAS, EDB, SGX in multi-billion dollar charge to list tech firms in Singapore

Jude Chan

Published Fri, Sep 17, 2021 · 08:25 AM

SINGAPORE is offering successful homegrown companies more funding as it tries to boost listings of high-growth technology startups on the Singapore Exchange (SGX).

On Friday morning, several initiatives were announced to fund companies at the later-stage, pre-IPO and IPO stages as well as to help them defray listing costs. Both before and after listing, companies will also be able to count on new forms of support from SGX as they go about raising funds and engaging with investors.

“We have heard repeatedly that one area where Singapore can do better is in making our public equity market more conducive for innovative growth companies,” said Minister for Trade and Industry Gan Kim Yong on Friday. “As more of our start-ups mature into regional and global companies, having a vibrant home equity market becomes more pertinent.”

Speaking at the SGX Centre just before the market opened, Mr Gan noted that four local startups - PatSnap, Carro, Nium and Carousell - have this year been valued as unicorns with valuations of at least US$1 billion. “More and more home-grown companies are doing well on the global stage, including Secretlab, Ninja Van and MiRXES,” he said.

“In the coming years, many Singaporean and Asian companies in high-growth, high-tech sectors will come of age, and seek to list on public markets. We should strive to anchor these companies in Singapore,” Mr Gan added. “To do this, we will make a concerted push to establish Singapore as the listing destination of choice for local and global market leaders, especially from high-growth and high-tech sectors.”

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Headlining the package of initiatives is a co-investment fund established by the government and Temasek. The fund's first tranche of S$1.5 billion will go towards supporting "promising high-growth enterprises and market leaders" in their initial public offerings (IPOs) in Singapore, including secondary and dual listings on the SGX.

Called Anchor Fund @ 65, the fund will be managed on a commercial basis by Temasek's wholly owned investment platform 65 Equity Partners. It will also provide pre-IPO financing to catalyse the growth of target enterprises and support them in their journey towards an eventual public listing.

At the same time, EDBI, the investment arm of the Singapore Economic Development Board (EDB), will establish a new Growth IPO Fund to invest in later-stage enterprises that are two or more funding rounds away from a public listing.

Starting with a fund size of up to S$500 million, EDBI will partner companies to grow their operations in Singapore and work towards an eventual public listing in Singapore.

Meanwhile, the Monetary Authority of Singapore (MAS) will expand the scope of support under its Grant for Equity Market Singapore (GEMS) scheme.

GEMS was first introduced in February 2019 to strengthen Singapore's equity capital market. It offers grants to help issuers defray some of their listing costs, to groom equity research talent through the co-funding of hiring expenses, and to support crowdsourced initiatives to develop Singapore's equity research ecosystem.

MAS will increase the co-funding of listing expenses for all companies under its listing grant. Companies with a market capitalisation of S$1 billion and above will now qualify for 70 per cent co-funding with a cap of S$2 million. The cap for smaller companies is now S$1 million.

The co-funding was originally capped at S$200,000 to S$1 million, depending on whether the listing was categorised under "New Technology", "High Growth" or "Other Sectors".

Under its research talent development grant, MAS will increase the funding for experienced professionals to S$6,000 per month from S$5,000 previously. The funding duration for experienced professionals who are Singapore citizens will also be extended to two years, from the previous cap of one year.

The enhancements to the GEMS scheme take immediate effect.

Finally, SGX said it will develop bespoke capital market solutions - ranging from private fundraising, liquidity and profile building, and augmenting future growth drivers - to support the unique needs of high-growth companies.

Under a Strategic Partnership Model, potential issuers will be able to tap SGX's network to access private market capital and expand their base of strategic investors.

SGX will also make available up to 24 months of liquidity support to drive price formation for potential inclusion into global indices, with an enhanced liquidity provider programme comprising over 40 market makers and active traders.

Each strategic partner company will also receive customised funded profiling initiatives, such as joint marketing, targeted corporate events and global investor outreach. Help will also be offered to build companies' capabilities in sustainability and industry-specific decarbonisation advisory services.

"This interagency initiative further sets Singapore apart as a capital markets hub and is a first of its kind within the region that ensures success for market leaders through deep collaboration between public and private sectors," said SGX chief executive officer Loh Boon Chye.

The announcement is a state-backed shot in the arm for SGX, which has grappled with fewer listings and lower liquidity in recent years.

Some high-profile tech names linked to the Republic, such as gaming hardware maker Razer and e-commerce and gaming giant Sea, chose to seek higher valuations and liquidity in other markets.

Razer was listed on the Hong Kong Stock Exchange in 2017, while Sea made its debut on the New York Stock Exchange in the same year.

On its part, SGX has sought to strengthen its platform, connectivity, and range of fundraising options through recent initiatives including dual-listing collaborations with overseas exchanges and the launch of the Special Purpose Acquisition Companies (SPACs) framework to allow blank-cheque companies with a minimum market capitalisation of S$150 million to list on the SGX mainboard.

“We know that the initiatives we are launching today are no magic bullet. But we believe they will blow new wind into the sails of our public equity market, and make SGX not just a viable but a compelling option for innovative growth companies seeking a public listing,” said Mr Gan. “We have moved mountains to establish ourselves as a global financial and business hub, and will spare no effort to achieve our ambitions for our economy and our people.”

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