Time for MAS, SGX to scrutinise issue managers

[SINGAPORE] This column said last week that companies seeking to list in Singapore might be more warmly received if they operated in fields already anchored by home-grown champions.

Mi Material could put that theory to the test when it debuts on the mainboard of the Singapore Exchange (SGX) on Wednesday (Oct 28) – joining a vibrant cluster of locally listed manufacturers within the semiconductor supply chain space. That includes companies such as AEM , Frencken Group and UMS Integration .

While these semiconductor-themed stocks are not blue-chips, they are quite well-established and have attracted strong investor interest over the past year.

Even after the recent sell-off, AEM is up 362.2 per cent this year on the back of sharply stronger profitability. The company’s market cap at the end of last week stood at S$2.5 billion, or about 41 times its annualised earnings for the first half of 2026.

Similarly, UMS has climbed 50.7 per cent this year, pushing the group’s market cap up to more than S$2 billion, or 30 times its annualised H1 2026 earnings.

Frencken has risen 48.6 per cent this year, and its market cap of S$970.8 million is 25 times its annualised H1 2026 earnings.

Much like its soon-to-be peers, Mi Material has also experienced a surge in earnings this year. For H1, the company – which produces solder spheres for semiconductor packaging – saw its adjusted profit after tax increase 251.1 per cent to US$14.3 million.

Based on its initial public offering price of S$1.80 a share, Mi Material will have a market cap of S$891 million at the point of listing, or about 24.3 times its annualised H1 2026 earnings.

Will strong local investor interest in semiconductor-themed stocks sweep Mi Material shares above their IPO price when trading begins in the week ahead?

Will it hold those gains, or eventually slide under water like so many new listings over the past year?

What will it take to break the trend of weak post-listing performance?

Regulatory intervention required

Among the theories I often hear for the poor performance of new listings is that investors have no appetite for the growth-oriented companies Singapore has been trying to attract.

Another gripe is that some issuers are just not ready for a public listing in the Singapore market, as they lack a credible narrative about how they will deliver value. Some market watchers also grumble that IPOs are often excessively priced.

Whatever the case, the fact that almost every new listing this year is under water is itself a problem. If investors do not expect to make money from an IPO, they are unlikely to participate.

This would make it harder for good companies to obtain a decent IPO valuation, and increase the likelihood of only weak companies seeking to list.

Given the damage this could do to the local market ecosystem, it is perhaps time for the Monetary Authority of Singapore (MAS) and SGX to intervene – by re-examining the role and responsibilities of issue managers in the IPO process, and introducing mechanisms to align the interests of those issue managers with the post-listing performance of their clients.

Issue managers are the central players in every IPO by design. Under SGX mainboard listing rules, every applicant for a listing must appoint an issue manager to ensure that it is suitable for a public listing, and that it is sufficiently set up to comply with continuing listing requirements.

In almost every IPO in 2026, the issue managers were also among the global coordinators, bookrunners and underwriters of the deal. This naturally puts issue managers in a pivotal position when it comes to vetting issuers, shaping their investment narratives, and pricing their IPOs.

To be sure, issue managers cannot afford to alienate listing aspirants and their pre-IPO investors – who will naturally want as high a valuation as possible.

Yet, when nearly every new listing quickly falls below its IPO price, MAS and SGX should ask whether the pursuit of transaction fees by issue managers is undermining public investor confidence and the long-term health of the local market ecosystem.

Flawed arguments for inaction

Some market watchers will probably not agree with me about the need for greater scrutiny of issue managers. For one thing, some of the worst-performing new listings this year were backed by institutional investors who presumably know a good thing when they see one.

For instance, flexible workspace provider JustCo’s cornerstone investors included Avanda Investment Management, JP Morgan Asset Management, Fullerton Fund Management, Amova Asset Management and Maybank Asset Management.

It was also disclosed that a chunk of the company’s IPO shares went to a BlackRock fund and Tecity Asset Management.

Why should regulators interfere with the business of issue managers when there is institutional investor support for the companies they are bringing to market? Wouldn’t more regulation just result in there being fewer IPOs?

Another counterargument I have heard is that IPOs in the United States and Hong Kong often do not perform well, either.

Notably, Grab tumbled immediately after landing on Nasdaq in late 2021 at an initial valuation of US$40 billion. Nearly five years on, its market cap stands at just US$11.4 billion.

Is it realistic to expect the Singapore market to avoid such turmoil as it seeks to draw hot new listings?

The way I see it, Singapore cannot compare itself to the US and Hong Kong. While those big, liquid markets naturally attract exciting companies from their own economic hinterland and beyond, Singapore is trying to draw exciting companies that will help bring liquidity to the local market.

Under the circumstances, it seems logical for MAS and SGX to ensure issue managers are incentivised to focus only on listing aspirants that will perform strongly and spur investor enthusiasm, and avoid the ones that might poison the well.

Acid test for Mi Material

What does all this mean for Mi Material? On the face of it, the company stands a good chance of defying the Singapore market’s IPO curse. Its earnings appear to be growing fast, and it will join a segment of the local market that has been accorded generous multiples by investors.

Yet, broad sentiment towards the technology sector has recently soured, and some investors may be concerned that Mi Material’s IPO price fully values its strong prospects.

These worries may be exacerbated by the recent track record of OCBC, the issue manager for Mi Material’s IPO.

OCBC was previously co-issue manager for Foundation Healthcare, one of the largest companies to list this year. Since its weak mainboard debut in July, Foundation Healthcare has slumped 31.6 per cent below its IPO price.

Against this backdrop, Mi Material’s own debut in the week ahead may have broad implications. A weak showing would further demonstrate that something has gone awry with the IPO ecosystem – and that it is time for decisive action by MAS and SGX.

On the other hand, a strong debut by Mi Material may show that businesses in familiar sectors supported by well-established domestic leaders possess a distinct advantage in building a local investor following – offering a model to identify future IPOs that may help revitalise the Singapore market.