This year saw Singapore’s first special purpose acquisition company (spac) complete its journey from a blank cheque company to its de-spac and eventual listing after acquiring a business.
Vertex Technology Acquisition Corporation (VTAC), the blank cheque company belonging to Vertex Holdings, was the first to list on the Singapore Exchange S68 (SGX) on Jan 20, 2022. VTAC was also the first to de-spac after it acquired 17Live, a live-streaming platform with a presence in Japan and Taiwan.
On Dec 8, 17Live became the first live-streaming platform to trade on SGX. As it turned out, investors were not too keen about the stock, sending it down by nearly a fifth to close its first trading day at $3.15 and down by another 15.6% on Dec 11 after the weekend.
This means minority investors who bought VTAC shares at the IPO price of $5 have lost nearly half the value of their investment. However, they belong to the minority because investors holding 62.53% of VTAC shares chose to redeem their money although they also voted for the de-spac to go ahead.
All eyes are now on the other two spacs, Pegasus Asia (Pegasus) and Novo Tellus Alpha Acquisition (NTAA), which, as of Dec 11, have yet to make any announcement to de-spac ahead of the two-year deadline.
However, they would likely need to ask for a 12-month extension, given the time needed to announce their target company, conduct the necessary presentations and call for an EGM to approve the acquisition and listing after de-spac.
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Sources familiar with the matter say Pegasus has identified next-generation broadband satellite operator Kacific Broadband Satellites as an acquisition target and is in a Private investment in public equity (Pipe) funding round. For NTAA, word on the street is that management is mulling whether to dissolve the spac and return the money to investors although other sources say a dissolution is highly unlikely. The spac has stayed mum since it was listed.
Lack of local IPOs
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Spac excitement aside, there have been just a handful of new listings on the SGX in 2023. Furthermore, most listings did not offer a public tranche, resulting in little interest from retail investors.
Of the six listings this year (see Table 1), only two IPOs — Niks Professional and Sheffield Green — had public tranches.
For most of the new listings, the aim of floating the company is to gain the listing status to improve their market standing. Going public helps companies burnish their reputation and attract new business partners and deals. The listed company also lends credibility when expanding into different markets.
In contrast, 2022 saw 13 companies make their listing debuts, including three secondary listings of entities already quoted in other exchanges.
Singapore typically sees some sizeable mainboard IPOs or REITs bolstering its overall IPO performance, which was sorely missing this year.
“REITs and business trusts have historically been the stronghold of the Singapore IPO market. However, with the uncertainties surrounding interest rates, REIT aspirants may adopt a wait-and-see approach and postpone their listing plans,” says Darren Ng, disruptive events advisory deputy leader, Deloitte Singapore.
“The comprehensive economic infrastructure and initiatives by the Singapore government in conjunction with SGX provides an ideal platform for companies aspiring to go public. Singapore, with its political stability and strong regulatory environment, sets the stage for unprecedented capital inflows, acts as a strategic bridge between the US and China, and is the regional headquarters of choice for numerous funds and family offices,” adds Ng.
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Interest in overseas markets
Ng is aware of the subdued IPO market in 2023 but he notes there is a wealth of high-calibre Singaporean companies ready to explore cross-border listings on global exchanges. These companies enjoy international recognition for their robust business fundamentals.
Apart from the recognition, other markets, especially the US, have been attractive for many local companies as they can command a higher valuation in a market which is popular globally, is more volatile and has higher liquidity.
For instance, construction equipment supplier Multi Ways Holdings soared as much as 553% to US$16.33 ($21.72) on its first trading day on on the NYSE American bourse for small-cap stocks on April 3, making it one of the top-performing stocks to debut in the first half of 2023. As at Dec 8, Multi Ways is trading at 23.7 US cents.
Other Singapore-based companies that have been listed in the US this year include Simpple, Ohmyhome, MoneyHero Group and WeBuy Global. As of Dec 8, they are up 19.6%, down 56.0%, down 71.7% and down 72.2% respectively.
Meanwhile, a couple of locally listed companies have spun off business entities to list on foreign markets to extract better value, liquidity and interest. Recently, Hong Kong has been an attractive market for spin-off listings, dual listings and secondary listings.
Japfa’s China milk business AustAsia listed on the Stock Exchange of Hong Kong (HKSE) in December 2022. The group saw this as an opportunity to better organise its business according to geography. The counter closed at HK$6.37 ($1.09) on its first day of trading, slightly below its offer price of HK$6.40.
However, Japfa UD2 has not performed well on HKSE and its stock price has been falling, Since its listing, the stock is down 66.6% to HK$2.13 on Dec 8. Neither has the spin-off boosted Japfa’s value too, with its own share price down 66.7% since the spin-off.
Coffee distributor Food Empire has also announced it is seeking a dual primary listing on HKSE to attract new investors, garner a more diverse shareholder base and mobilise additional resources for potential expansion. The listing could also give Food Empire a foothold in the Greater China market.
Although HKSE is at a low, Food Empire’s CEO Tan Wang Cheow expects an eventual market recovery which presents a growth opportunity for the stock.
Delisting trend continues
In 2022, SGX saw the delisting of 21 stocks, something which had not been seen in a long time. However, as most of the counters saw little trading action and generate little interest, it is unlikely they would be missed by investors.
This year, the numbers are not getting any better with about 20 companies delisting or privatising. Notable ones include Lian Beng after the controlling Ong family exercised its right to acquire all shares in the company at 68 cents per share through its investment holding company OSC Capital.
LHN Logistics too delisted from the exchange, just shortly after its parent company LHN Group pursued a spin-off listing of the logistics arm. The privatisation offer of 22.66 cents per share was made by Milkyway Chemical. This was 13.3% higher than LHN Logistics’ IPO price of 20 cents in April 2022.
Meanwhile, LYC Medicare, which had expressed interest in listing in Singapore and submitted its prospectus, withdrew its listing application on Dec 4. LYC Medicare was supposed to be the spin-off listing of Malaysia-based Bursa-listed LYC Healthcare’s Singapore operations.
SGX, more than any other party, is keeping close tabs on the IPO deal flow. At its AGM on Oct 5, CEO Loh Boon Chye acknowledged that the number of new listings has been low but said the situation is not unique to Singapore and is commonly seen across the region. He says the emergence of unicorns in the region bodes well for the region as they will be prime candidates for listing when the timing is right. “It is a matter of time before confidence and demand returns,” says Loh. “When the market turns, we want to be ready for that.”
