SGX seeks diversity of listings

HAVING steamlined its listing rules, the Singapore Stock Exchange is starting to spread the message that it is open for business to companies seeking a dual or secondary listing . . .

Singapore currently manages assets valued at US$2 trillion on behalf of institutional investors, family offices, ultra high net worth individuals and sovereign wealth funds.  
As a global financial centre, said to be poised to overtake Switzerland as the world’s biggest wealth management centre during the next decade, Singapore is increasingly an important source of global capital.
Australia has already seen the weight of that capital in its real estate sector, where Singapore — and global investors based in Singapore — have been prominent for the past two to three decades. But the pace of capital inflow has significantly increased in recent years, in part because of the growing pool of capital attracted to Singapore. Curiously, foreign, including Australian, companies have not sought to tap that capital when it comes to seeking public funding through a listing on the Singapore stock market.
However, that may start to change as the SGX starts to spread the message that it is open for business to companies seeking a dual or secondary listing  on its main board, or listing on its second board, known as Catalyst.
Simon Lim, Head of Listing at SGX, told ATI that in initial public offerings, the role of a cornerstone investor is crucial in getting a capital raising off the ground.
Lim says: “In the past, these cornerston investors have always been institutions. Today in Singapore, they can be family offices or ultra high net worth individuals.”
Lim says SGX streamlined its listing rules in 2014, making procedures less onerous in seeking a listing. Essentially, where a company is secondary-listed on the SGX, and primary-listed on the main board of any of 22 developed jurisdictions other than Singapore, SGX will not impose additional regulatory requirements.
As long as the company remains primary-listed on its home exchange and complies with all relevant rules of its home exchange, SGX will only ask the company for timely disclosure of financial information.
If it is an Australian company already listed on the ASX, Lim says the process will be greatly simplified if it seeks secondary listing on the SGX. He says SGX takes into account that the company is approved by Australian regulatory authorities and is in compliance with ASX rules and regulations.
For a company from a developing jurisdiction, SGX will review the home exchange’s legal and regulatory requirements, and may
impose additional requirements to enhance shareholder protection and corporate governance standards.
So far, Singapore has attracted 22 dual listings, including a number from Australia and New Zealand. Lim say a reason for a secondary listing in Singapore may be that a large corporate wishes to demerge its international business into a separate listed entity.
However, companies seeking listing in
Singapore should be of an appropriate size and have an international footprint. He suggests a minimum market cap of around S$150 million.
Lim suggests another possible candidate for listing in Singapore could be foreign-Australian joint venture businesses that require capital to execute their development plans in Australia.
He says some 770 companies are listed on the SGX today, with a total market capitalisation of US$640 billion. Nearly 40 per cent of them are domiciled outside Singapore, mostly from neighbouring ASEAN countries. Of these, 140 companies are from China, and Lim says that, lately, more State-owned Chinese enterprises have been seeking IPOs in Singapore.
The latest to float was the water business
division of the large Chinese SOE, China Everbright Water, a division of the Chinese conglomerate Everbright. This was about 18 months ago. The Chinese company did a
reverse takeover of Singapore-listed HanKore Environment Tech Group for A$1.2 billion. The listed entity currently has a market capitalisation of  S$1.37 billion.  
Given Singapore’s strength in financial services, most of its listed companies are operating in the financial services and industrial sectors. SGX is promoting six sectors, including maritime services, which is part of Singapore’s DNA, Lim says, given Singapore’s role as an entrepot through all of its nationhood.
Sixty maritime-related companies are listed on the SGX, which makes Singapore the largest hub for maritime companies in Asia.
Another sector is oil and gas, a natural spinoff from the fact that Singapore has a large petrochemical processing and refining base.
Five years ago, SGX began promoting the listing of mining companies. Lim says that while Singapore does not have mining activities, some of Singapore’s neighbours, such as Indonesia and northern Thailand, do.
Says Lim: “We are well set up to provide the capital needed to finance mining activities.” The latest listing in this sector comes from Australia. Perth-based Alliance Mining floated on Singapore’s Catalyst exchange in 2014, issuing 67.6 million shares at 23 Singapore cents per share.
Another Australian company listed in Singapore is the umbilical cord blood and cord lining bank, Cordlife Group Ltd, which has business interests throughout Asia. In Singapore, Cordlife started by listing its international operations on SGX,  but its main listing on the Australian Stock Exchange.
Over time, Cordlife delisted from the ASX. Market capitalisation of the Singapore-listed company has risen from S$100 million (at time of listing) to S$360 million today. It is the first cord blood bank to be set up in Singapore (May 2001) and among the first in Asia.
Last year was not a particularly fruitful one for IPOs in Singapore. Primary raisings ran to a total of S$400 million, but existing listed companies raised almost US$4.8 billion in fresh capital. There is a broad spectrum of companies listed in Singapore with market caps ranging from S$10 million to S$100 million and up to S$500 million.
It seems that companies, which choose to list on the second board, Catalyst, do so for the speed of listing on that market. Lim says it takes half the time to clear documentation for listing on Catalyst because it does not require sign-off by Singapore’s regulator.