The Monetary Authority of Singapore (MAS) will launch an S$75 million ($55.4 million) grant next month to support enterprises seeking to raise capital through the Singapore equity market, which has had a lacklustre run in the last few years.
According to a MAS announcement on Monday, the grant for equity market Singapore (GEMS) will come through the Financial Sector Development Fund (FSDF). The scheme will take effect from February 14.
The scheme, which is set to run for three years, will comprise three components – a listing grant to facilitate enterprises seeking a listing on Singapore Exchange (SGX), a research talent development grant to strengthen Singapore’s coverage of enterprises, and a research initiatives grant to support crowd-sourced initiatives to boost the country’s equity research ecosystem.
Singapore has been facing an IPO drought of sorts over the last couple of years even as other Asian bourses such as the Hong Kong Stock Exchange (HKEx) have caught up in terms of their listing activity. Thailand and Vietnam, too, have seen relatively sizeable capital market activity in the region.
Towards the end of 2018, SGX recorded a total of 15 IPOs comprising three listings on the Mainboard and 12 on the Catalist Board, raising a total of S$0.73 billion ($0.54 billion), marking the lowest capital raised since 2015, per a recent PwC report.
SGX continues to face competition from Asian bourses such as the Hong Kong Stock Exchange (HKEx) which bagged 207 newly-listed companies in 2018, approximately 19 per cent more than 2017 when it saw the listing of 174 companies. HKEx has been aggressively liberalising its market regulations including the loosening of capital requirements for internet, high-tech and biomedical R&D industries, the report noted.
In the past, Singapore-founded companies, including gaming tech companies Razer and Sea Ltd, have chosen to list outside the city-state as the Singapore bourse was losing its lustre.
The Singapore government’s new scheme, GEMS, comes amid this backdrop when the city-state is aiming to strengthen the bourse as a centre for capital raising and enterprise financing.
The listing grant will encourage eligible enterprises across a range of sectors including new technology and logistics to list on SGX by co-funding some of the listing expenses. For example, enterprises in a new tech sector with a minimum market cap of S$300 million could receive co-funding of 70 per cent of eligible listing expenses, with the grant capped at S$1 million.
On the other hand, enterprises from all sectors with no minimum market capitalisation could receive co-funding of 20 per cent of eligible listing expenses, with the grant capped at S$200,000.
The PwC report projects that Singapore’s capital market will continue to attract listings from niche sectors such as REITs & BTs, healthcare and F&B in 2019. REITs and BTs led the IPO pack on SGX accounting for 57.7 per cent in value of all offerings last year. However, all the S$422 million ($312 million) raised came from a single offering, Mainboard-listed Sasseur Reit – an outlet mall REIT.
Ng Yao Loong, Assistant Managing Director, MAS, said, “Singapore has been working to enhance our private and public markets so that domestic and international growth enterprises are able to access different types of capital best suited to their needs. Results from our private market initiatives 3 and bond grant schemes 4 have been encouraging. GEMS will help strengthen Singapore’s position as the go-to venue in Asia for enterprises seeking growth financing.”
Meanwhile, the research talent development grant will co-fund locals in two ways – 70 per cent of the salaries for fresh graduates hired as equity research analysts and, 50 per cent of the salaries for re-employed experienced equity research analysts. It is designed to groom a pipeline of equity research analysts and retain experienced research talent to initiate research coverage primarily of listed mid and small-cap enterprises, the statement added.
Under the research initiatives grant, MAS will earmark funds to crowdsource initiatives that will help the development of Singapore’s equity research ecosystem. Such initiatives can include publication of industry or sector primers, innovative ways to distribute research and disseminate enterprise information to investors, it added.
FSDF was established in 1999 under the MAS Act for the purpose of promoting Singapore as a financial centre.
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