Temasek unit to boost Singapore Stock Exchange’s anemic tech listings

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SINGAPORE – The Singapore Stock Exchange will get help from government-related sources to boost anemic technology quotes as it prepares to welcome Specialized Acquisition Companies (SPACs) to the stock market.

The Southeast Asian financial hub on Friday announced a concerted effort to attract high-growth startups to the SGX, which is notorious for its rival Hong Kong’s lack of ability to massively attract companies from the new economy to seek initial public offerings.

As part of the boost the city-state plans to give its stock market, a first S $ 1.5 billion ($ 1.1 billion) of funding is being managed by 65 Equity Partners, a platform – investment form 100% owned by Singaporean state investor Temasek.

This initiative, named Anchor Fund @ 65, will support promising, high-growth companies for public fundraising through the SGX, as well as provide pre-IPO funding to encourage the growth of target companies and support them in bidding for a possible future. public listing. in Singapore.

The SGX recently updated a framework for SPAC listings, which is expected to attract high-growth companies such as tech startups. Earlier this month, the exchange cut in half the proposed minimum market capitalization for PSPCs to list in Singapore.

The market capitalization threshold is now set at SG $ 150 million, up from SG $ 300 million previously, which some stakeholders had criticized as too high a barrier for some small players to participate in the PSPC process.

Sometimes referred to as “blank check” companies, SPACs are fictitious entities created to raise funds through public listing to eventually acquire – or merge with – a target company.

This allows the target company, typically a high-flying startup, to go public faster than through a traditional IPO. In Singapore, the merger of a SPAC and its target must take place within 24 months of the IPO, with an extension of up to 12 months under certain conditions.

PSPC listings on the SGX will also benefit from additional government support, it was announced on Friday.

An existing program run by the Monetary Authority of Singapore to strengthen the country’s equity market with a grant to help issuers cover part of their listing costs has been expanded to cover PSPCs.

Notably, the MAS is preparing to increase the co-financing of listing expenses for companies from SG $ 1 million to SG $ 2 million under the Enhanced Grant for Singapore Stock Markets (GEMS), such as the program is known.

This expanded listing grant to cover IPO costs will fund up to 70% of eligible expenses, with a limit of SG $ 2 million, for companies that are unicorns in Singapore dollars, with a market capitalization of SG $ 1 billion or more.

In addition, SG $ 500 million has been earmarked by EDBI, the investment arm of Singapore’s Economic Development Council, to target late stage companies, typically in two or more funding rounds away from public listing. .

With this fund, EDBI will work with target companies to develop their operations in Singapore and work towards a possible public listing in the city-state.

EDBI envisions high growth, globally competitive and innovative startups, usually in a Series B funding stage or later, with the aim of getting them to locate in Singapore to develop new economy sectors. in the country.

The city-state seeks to bolster its proposal as a funding hub in Asia as interest in high-flying Southeast Asian tech companies intensifies amid the COVID-19 pandemic, which has fueled digital economy businesses serving people who depend on technology to get through the health crisis.

SGX, however, has struggled to attract a large number of tech startups to seek IPOs in Singapore, the exchange’s best-known listed companies – like Singapore Airlines and DBS Group Holdings, the world’s largest lender. Southeast Asia – mainly from traditional sectors. like transportation, finance and real estate.

The exchange in August reported a 20.5% drop in profit to SG $ 205.6 million in the six months ending late June, its second half, compared to a year ago.

Southeast Asia’s largest state-owned company Sea, gaming hardware maker Razer and others have opted for listings elsewhere, despite strong ties to the city-state through their Singaporean founders.

Singapore-based Grab Holdings, one of Southeast Asia’s most beloved startups, has also announced plans to go public through a SPAC – but in the United States, through a deal with Altimeter Growth that would value the nearly $ 40 billion supplier of “superapps”. .

SGX Managing Director Loh Boon Chye said in a speech Friday that the Singapore Stock Exchange provides an international platform, network and ecosystem for Asian and local businesses on the cusp of global success to access capital of growth from private markets to public markets and across asset classes.

“This interagency initiative further distinguishes Singapore as a hub for capital markets and is the first of its kind in the region that ensures the success of market leaders through close collaboration between the public and private sectors,” he said. he said about the announcements to support registrations in Singapore. .

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