Source of article: The Business Times
In summary:
We have a total of 6 IPOs in Singapore in 2023, not including the business combination of VTAC with 17 LIVE INC.
The key issue discouraging companies from doing an IPO in Singapore boils down to a costs versus benefits consideration. The costs of legal and regulatory compliance is perceived to outweigh the benefits of listing and maintaining a listing status in the Singapore market.
That said, Singapore’s sluggish market and dearth of good listing candidates are predicated by multi-dimensional global factors. Uncertain macro-economic conditions such as the Ukraine war and the recent targeted attacks in the vital Red Sea shipping lane are expected to negatively affect Singapore’s market performance. In addition, traditional industries in Singapore such as transport, retail and media have been disrupted and will continue to face challenges from technological advancements such as digitalization and the advent of artificial intelligence.
The so-called Magnificent Seven mega-cap, high-tech stocks in the United States – comprising Apple, Alphabet, Microsoft, Amazon, Tesla, Meta Platforms and Nvidia, continue to reign supreme and have a magnetic force pulling promising high-tech companies to the US market.
Persistent weak valuations have caused a wide rift between the interests of controlling shareholders and minority investors in Singapore. We have seen in recent times a number of exit offers and de-listings in Singapore where controlling shareholders ride roughshod over the interests of minority investors with low-ball offers. When a number of controlling shareholders have succeeded in privatising issuers with low-ball offers, the cynicism that there are inadequate regulatory guardrails to protect minority interests have a double-whammy negative effect on market sentiments.
Further, there are no lack of alternative sources of funding from private equity supported by the strong presence of family offices and a growing number of fund companies that have been set up in Singapore.
The SPAC market in the United States has become moribund. A number of de-SPACed companies in the United States have languished after their business combinations. It is not envisaged that the SPAC market will be the silver bullet that will uplift Singapore’s market sentiments in 2024. The outcome of VTAC’s recent business combination with 17 LIVE INC show that many independent shareholders chose to re-deem their shares. Another Spac that listed in Singapore around the same time, Pegasus Asia, confirmed that it plans to dissolve after considering macroeconomic and market conditions.
I shared my views with Megan Cheah in the attached front page story in the Singapore Business Times.
Singapore IPO climate to look up in 2024, but observers mixed on return of Reits, Spacs
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