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Deloitte hopes to see more funds raised from Singapore IPOs in 2022 as companies navigate rising interest rates and post-pandemic economic conditions

  • SGX’s SPAC framework off to good start with three SPAC listings
  • Catalist listings back to pre-pandemic levels

SINGAPORE, 29 June 2022 – Initial public offering (IPO) activity in Singapore improved in the first half of 2022 compared to the same period last year. There was a total of nine IPOs, raising S$572 million in proceeds, which contributed to a total IPO market capitalisation of S$790 million. Among the nine IPOs, six were Catalist listings that raised a total of S$44 million, while the other three were Mainboard SPAC listings that raised a total of S$528 million.

Following the introduction of the special purpose acquisition companies (SPACs) listing framework on 3 September 2021, the Singapore Exchange (SGX) welcomed three Mainboard SPAC listings in January 2022. SPAC listings must place at least 90% of the gross proceeds raised in escrow, however, the three SPAC listings had placed 100% of the proceeds in escrow, giving greater assurance to investors that their capital is protected.

Fast-growing companies remain attracted to the Singapore Exchange as a listing venue for growth and capital raising, as evidenced by the six Catalist listings in 2022 H1, surpassing the whole of 2021 with five Catalist listings, and outperforming each of the previous five half-year periods with four or fewer Catalist listings.

Mr Darren Ng, Disruptive Events Advisory Deputy Leader, Deloitte Singapore anticipates more capital shifting to SEA due to geopolitical tensions, fear of aggressive rates hikes in the U.S. and Europe, China’s crackdown on US-listed companies and supply chain disruptions. These factors could set the stage for more IPOs, dual or secondary listings on the Singapore IPO capital market.

“Singapore started 2022 with a three-fold increase in the number of IPOs and a 70% increase in funds raised, compared to the first six months of 2021. This is in spite of strong economic headwinds and intensifying competition for investments as global economies recover from the pandemic. Tech startups in Southeast Asia (SEA) have been growing remarkably, and we see a wave of SEA unicorns going to the U.S. for a listing in search of better liquidity and valuation. This phenomenon may help SGX’s secondary listing market breathe new life, with SEA companies listed in the U.S. looking to move closer to home to tap into wider investors familiar with their brands in Asia and benefiting from extended trading hours by trading on more than one exchange with different time zones,” said Mr Ng.

According to the findings in Deloitte’s mid-year review of the 2022 Singapore IPO market, real estate investment trust or business trust (S-REITs) listings remain the most significant type of listings on the Singapore bourse, notwithstanding that there has not been any S-REIT listing in the first half of 2022. Deloitte found that, since 2018 and in spite of the COVID-19 pandemic, REIT or Trust listings had raised S$5.1 billion in proceeds and contributed S$7.9 billion to the IPO market capitalisation, representing 73% of the total funds raised and 54% of the IPO market capitalisation in the last four and a half years.

“The outlook for S-REITs remains robust given improving demand, following the easing of the Covid-19 restrictions around the world. S-REITs will offer investors some protection against inflation, as property values and rents are likely to rise in tandem with inflation,” said Ms Tay Hwee Ling, Disruptive Events Advisory Leader, Deloitte Southeast Asia and Singapore.

As of 29 June 2022, Singapore has 44 listed S-REITs. Of these, 39 out of 44 S-REITs (89%) have at least some properties or assets outside of Singapore. “We are also optimistic that managers of foreign assets will continue to find Singapore an attractive destination for a REIT listing, given the city-state’s track record as the REIT hub of Asia and its continued improvements to renew the competitive advantages for S-REITs. As the global economy improves and Singapore reopens borders, we expect to see more REIT listings in Singapore. That said, in an environment of rising interest rates, S-REITs may need to offer higher dividend yields in order to better attract investors,” added Ms Tay.

On the outlook for the rest of 2022, Ms Tay opines that, "With the world still recovering from the effects of the Covid-19 pandemic, and the ongoing disruptions brought about by the geopolitical tension such as the Russia-Ukraine conflict amid a rising inflation and interest rate environment, some companies are taking a wait-and-see approach, instead of rushing to go public at this juncture, some are preparing for IPO readiness while waiting for the right market conditions and more favourable valuations.

“Despite these global factors and market volatility, we saw Singapore off to a good start with three SPAC listings since the introduction of the SPAC framework in September 2021, and the number of listings in H1 2022 surpassing the total number of Singapore IPOs in 2021. With the resumption of ThaiBev proposed-spin-off that could potentially raise up to S$1.4 billion, the secondary listing of NIO and Indonesia’s blockbuster listing GoTo Gojek Tokopedia Tbk which raised US$1 billion, we are hopeful that these would stimulate the market to boost IPO activity in Singapore and the region,” said Ms Tay, who expects more IPO activity in the second half of 2022, if companies manage to find realistic valuations that are acceptable at the right price to investors.

Note to Editors:

In addition to the nine IPOs in 2022 H1, the SGX also welcomed the listing of Yangzijiang Financial Holding Ltd, a spin-off from Yangzijiang Shipbuilding (Holdings) with principal businesses comprising investment management and debt investment, which was listed by introduction on the Mainboard on 28 April 2022, as well as the secondary listing of NIO Inc. on 20 May 2022. NIO Inc., a global smart electric vehicle company and the first company in the world to be listed on three exchanges – the New York Stock Exchange, Hong Kong Exchange and SGX.

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