Singapore is set to support high-growth enterprises seeking to raise capital in its public equity market through a slew of new measures.
This comes as more start-ups and companies here grow and mature, noted Minister for Trade and Industry Gan Kim Yong.
“We have heard repeatedly that one area where Singapore can do better is in making our public equity market more conducive for innovative growth companies,” he stressed at the SGX Securities Market Open on Sep 17.
With more start-ups maturing into regional and global companies, Gan believes they should have “continued access to a range of financing options to support their expansion plans”.
Among the initiatives to come is the establishment of a co-investment fund by the government, Temasek Holdings and the Singapore Exchange (SGX).
Called Anchor Fund @ 65, the fund will invest in late stage private funding as well as the initial public offering (IPOs) of high-growth companies.
The intent of this is for companies to anchor their listings in Singapore, explained Gan.
See also: Proxy plays for Singapore equities
The fund will start off with $1.5 billion in capital in the first tranche, and will be managed on a commercial basis by 65 Equity Partners – a new wholly-owned investment platform under Temasek.
65 Equity Partners will also manage a $1 billion Local Enterprises Fund @ 65 which will look to supporting large local enterprises to transform, expand and scale.
Another upcoming initiative is the Growth IPO Fund set up by EDBI, the investment arm of Singapore’s Economic Development Board (EDB).
Starting with a fund size of up to $500 million, EDBI will invest in growth stage companies at earlier stages of development and partner with them to growth their operations.
The government body also intends to invest in “future market leaders and technology inventors that are two to five years away from a public listing” on the SGX, noted Gan.
“This is in line with EDBI’s strategic objective to anchor high-growth companies and investors in Singapore to grow our future economic pillars,” he added.
A third initiative to come is the enhancement of the Grant for Equity Market Singapore (GEMS) scheme by the Monetary Authority of Singapore (MAS).
As part of this, the central bank will increase the co-funding of listing expenses for all companies under its listing grant. Companies with a market capitalisation of $1 billion and above will now qualify for 70% co-funding with a cap of $2 million. The cap for smaller companies is now $1 million.
GEMS was first introduced in February 2019 to strengthen Singapore's equity capital market.
It offers grants to: help issuers defray some of their listing costs, groom equity research talent through the co-funding of hiring expenses, and to support crowdsourced initiatives to develop Singapore's equity research ecosystem.
Initially, the co-funding was capped between $200,000 to $1 million, depending on whether the listing was categorised under "New Technology", "High Growth" or "Other Sectors".
The latest expansion will also support listings by Special Purpose Acquisition Companies (SPACs).
“This will better support listings of unicorn companies in Singapore,” Gan says.
Four local startups valued as unicorns in 2021 with valuations of at least US$1 billion ($1.35 billion). These include PatSnap, Carro, Nium and most recently, Carousell.
Another adjustment under the GEMS scheme is the expansion of the talent development grant to co-fund hiring costs for two years. This is up from the earlier cap of a year.
The move comes as “having a strong ecosystem of research analysts to facilitate price discovery and trading liquidity is also a critical success factor for our public equity market,” says Gan.
Meanwhile, the final initiative put forth was SGX’s Strategic Partnership Model.
As part of this, the local bourse will work alongside companies to provide bespoke capital market solutions ranging from private fundraising to enhancing liquidity and profile-building.
Additionally, potential issuers will be able to tap on SGX's network to access private market capital and expand their base of strategic investors.
For instance, SGX’s enhanced liquidity provider programme – which comprises over 40 market makers and active traders – will provide liquidity support for partner companies for up to 24 months. The support will take the form of driving price formation with the view towards being included in global indices.
Partner companies will also receive customised funded profiling initiatives, such as joint marketing, targeted corporate events and global investor outreach.
Capital raising destination
The latest initiatives are slated to enhance Singapore’s attractiveness as a destination for capital raising by both local and regional enterprises.
Says Loh Boon Chye, CEO of SGX, “There are many Asian and home-grown companies which are at the cusp of global success. Anchored in Asia’s only AAA-rated economy, SGX provides an international platform, network and ecosystem for these companies to access growth capital from private to public markets and across asset classes”.
He adds that the latest interagency initiative further sets Singapore apart as a capital markets hub for this is the first initiative in the region that fosters deep collaboration between the public and private sector.
Acknowledging that the initiatives are no magic bullet, Gan reckons that the new measures will “blow new wind into the sails of our private equity market”.
He hopes that it will make “SGX not just a viable but a compelling option for innovative growth companies seeking a public listing”.
The way he sees it, the moves are not just for the sake of having high valuations or market cap.
“It is to give the most promising startups and entrepreneurs from Singapore and across the region another engine of growth, and to allow them to stay rooted here as they ride the wave of opportunity globally,” stresses Gan.
Cover image: MTI
