Listing success stories will boost SGX liquidity: Temasek unit CEO

Singapore

PERCEPTIONS of low liquidity on the Singapore Exchange have kept some companies from listing locally, Tan Chong Lee, chief executive of Temasek's 65 Equity Partners, acknowledges.

But the Anchor Fund @ 65 - the S$1.5 billion co-investment fund established by Temasek and the Singapore government - could catalyse listings that gradually change this situation, he reckons.

"To break this cycle, there's nothing like having a success story, and that's the whole idea of the Anchor Fund... to provide a basis for companies to consider listing in Singapore," said Tan, who spoke to The Business Times ahead of 65 Equity Partners' launch on Wednesday (Oct 27).

Announced in September, Anchor Fund @ 65 will back high-growth companies to enable their eventual initial public offering (IPO) in Singapore. Managed by 65 Equity Partners, the fund may invest in companies' pre-IPO rounds, or as a cornerstone or institutional investor at IPO.

Anchor Fund @ 65 is one of several initiatives by the Republic to revive the local bourse, which is widely seen as having missed out on tech listings.

It is natural that many tech companies would want to go public in the US, given that their peers are listed there, noted Tan. This helps with benchmarking their valuation.

Hence, Anchor Fund @ 65 takes a flexible approach and does not limit portfolio companies to a primary listing on the SGX; they can also opt for a secondary or dual listing here.

"Our argument is, why shouldn't we complement the interest and demand in a US listing with demand from Singapore?" said Tan, who is also president of Temasek International.

He added: "If companies want to list in the US because they have comparables there, (Singapore) can become the secondary listing location. Over time, if we can attract more and more of such companies to list here, this in itself creates a benchmark. We have to think of this as a journey, as opposed to a silver bullet."

Tan also challenged the "blanket view" that SGX companies suffer low liquidity. By listing in Singapore, South-east Asian companies can get more visibility among analysts and retail investors, he said, pointing to iFast, Wilmar and DBS as examples of locally-listed companies with a strong following.

Anchor Fund @ 65 is especially keen to back companies with a South-east Asian footprint and scalable business model. That said, it would not rule out investing in companies from other Asian markets, such as Japan, as long as the business can be "well-understood by Singapore investors".

The fund is also open to investing in companies that go public via a merger with a special purpose acquisition company (SPAC), for which the SGX last month rolled out a framework. But Tan added: "The SPAC itself is just a form of listing, it doesn't drive our interest or otherwise."

Besides the Anchor Fund, 65 Equity Partners also manages Local Enterprises Fund @ 65, a joint S$1 billion fund with the government announced during this year's Budget. Its aim is to develop homegrown large companies into regional champions.

In August, 65 Equity Partners emerged as part of a consortium proposing to buy 92 per of corporate-services provider Boardroom, from existing shareholder GK Goh, for S$312 million. Tan declined to comment on the deal, citing that it is still in progress.

Beyond the two funds, 65 Equity Partners also has S$2 billion in capital that can be invested internationally, such as in Europe and the US. Its overall funds under management adds up to S$4.5 billion.

The firm will be working closely with its parent Temasek, as well as holding stakes in three Temasek-linked private equity investors: Tower Capital Asia, Novo Tellus Capital Partners and Temasek-owned Heliconia Capital Management.

In fact, Temasek's stake in Tower Capital and Novo Tellus - 30 per cent and 10 respectively - have been transferred to 65 Equity Partners. Pending regulatory approval, Temasek's 100 per cent ownership of Heliconia will also be held by 65 Equity Partners.

Overall, 65 Equity Partners is positioning itself as a platform addressing the funding needs of not just entrepreneur-led businesses, but also mid-sized, family-owned ones. Its target investment size across deals is US$100 million to US$200 million.

The firm is currently building up its team in Europe and the US, and expects to have a headcount of over 40 by mid-2022.