On Friday, September 17, the government announced a package of measures aimed at attracting high-tech local, high-growth and regional firms to list on the Singapore Exchange (SGX).
The most significant effort is the creation of the Anchor Fund @ 65, a fund with an initial tranche of $1.5 billion that will help potential high-growth businesses obtain money via public offerings in the United States. The fund will be co-invested by the government and Temasek Holdings.
A high-growth business often produces substantial positive cash flow, which grows faster than the economy as a whole. However, they usually pay little to no dividends to shareholders, preferring to reinvest the majority of earnings back into the company’s growing operations.
Another effort is the Growth IPO Fund, which focuses on late-stage private companies that are two or more financing rounds away from a public offering. It will assist them in expanding and preparing for a future initial public offering (IPO) in the United States.
This IPO fund, which will start with a $500 million first tranche, will be set up by EDBI, the Economic Development Board’s investment arm, and will primarily concentrate on future industry leaders and technological pioneers.
The Monetary Authority of Singapore (MAS) will also improve its Grant for Equity Market Singapore (Gems) program, which was launched in early 2019, to help businesses seeking to list and strengthen Singapore’s equity research ecosystem.
The SGX, for its part, will establish a Strategic Partnership Model to provide customized solutions for high-growth businesses ranging from private market fund-raising to increased liquidity and worldwide investor outreach.
Minister for Trade and Industry Gan Kim Yong, speaking at the SGX’s Securities Market Open event on Friday morning, said Singapore will make a concerted effort to establish itself as the listing destination of choice for local and global market leaders, particularly in the high-growth and high-tech sectors.
“Many Singaporean and Asian businesses in high-growth, high-tech industries will reach maturity in the coming years and want to list on public markets. He said, “We should try to anchor these businesses in Singapore.”
Mr Gan went on to say that the Anchor Fund @ 65 would be managed on a commercial basis by Temasek’s new and fully owned investment platform, 65 Equity Partners.
The $1 billion Local Enterprises Fund @ 65, which was introduced in this year’s Budget to assist big local businesses change, grow, and scale, will also be managed by 65 Equity Partners.
Temasek’s strong network and deep knowledge will be available to both the Anchor Fund @ 65 and the Local Enterprises Fund @ 65, which will be ideally positioned to assist portfolio firms develop and thrive from inception through listing, according to the minister.
The Gems listing award, which assists with listing expenses, will have its limit raised from $1 million to $2 million in order to better support unicorn company listings in Singapore. The funding will also be extended to assist special purpose acquisition businesses in their listings (Spacs).
MAS will extend the Gems research talent development award to co-fund hiring expenses of research talent for two years, up from the previous limit of one year, to improve price discovery and enhance trading liquidity.
“We recognize that the measures we are announcing today are not a panacea. However, we think they will infuse fresh life into our public stock market, making SGX not just a viable but also an attractive alternative for creative development companies.”
Mr Gan said that the package was not put together only for the purpose of achieving high values or market capitalization.
“It aims to provide another engine of development for Singapore’s and the region’s most promising start-ups and entrepreneurs, allowing them to remain anchored locally while riding the global wave of opportunity.”
The measures will increase Singapore’s appeal as a location for capital raising by local and regional businesses, according to a joint statement from the Ministry of Trade and Industry, the MAS, and Temasek.
“Many Asian and home-grown businesses are on the verge of global success,” said SGX chief executive Loh Boon Chye.
The initiatives will expand on previous SGX efforts to improve its trading platform, connectivity, and fund-raising possibilities, such as dual-listing partnerships with foreign exchanges and the introduction of the Spacs framework.
“This inter-agency effort further distinguishes Singapore as a capital markets center, and it is the first of its type in the region, ensuring market leaders’ success via close cooperation between the public and private sectors,” Mr Loh said.