Singapore’s IPO capital market exceeds expectations despite global uncertainties
- Singapore’s IPO proceeds grew 182% in the first six months of 2019
- Real Estate remains the key driver of Singapore’s IPO activity
Singapore, 1 July 2019 — Singapore’s IPO capital market saw strong results in the first six months of 2019.
According to data released by Deloitte, the Singapore IPO capital market saw nine initial public offerings (IPOs) totaling S$1.55 billion in proceeds raised and a market capitalisation of S$2.24 billion in the first six months of 2019, outperforming the same period in 2018 in terms of number of IPOs listed and total funds raised. There is a 182% increase in funds raised compared to the first six months of 2018, where seven IPOs raised S$548 million in proceeds.
In addition, on 27 June 2019, there was also one lodgement with the Monetary Authority of Singapore (MAS) by KinderWorld International Group Ltd. for listing on the Singapore Exchange (“SGX”) Mainboard.
The higher funds raised in the first six months of 2019 was mainly due to the two U.S. Real Estate Investment Trusts (“REITs”) listed on the Mainboard. These two REITs accounted for 96% of total funds raised with US$1.06 billion (S$1.49 billion) in proceeds as at IPO.
The remaining seven company IPOs, all listed on the Catalist, raised a total of S$58.53 million, with the gross amount raised by each of the seven Catalist IPOs ranging from S$3.9 million to S$15 million. During the same period last year, each of the six Catalist IPOs listed then raised gross amounts ranging from S$4.5 million to S$54.7 million.
Responding to the performance of the Singapore capital market in the first six months of 2019, Ms Tay Hwee Ling, Global IFRS & Offerings Services Leader, Deloitte Southeast Asia and Singapore, said: “SGX has been an attractive bourse of choice for both domestic and foreign trusts. Looking at the performances of the Singapore IPO market in the past 3.5 years, foreign issuers have contributed to 64% of the total IPO amount raised of S$9.2 billion on the SGX from 2016 to the first half of this year.”
Foreign issuers on SGX
The United States and China emerged as the top two foreign countries in terms of total IPO amount raised from 2016 to 30 June 2019, and this is mainly attributed to proceeds raised by the trusts from these countries listed on SGX. Trusts from the United States raised the highest amount - S$2.7 billion since 2016. Apart from the United States and China, a good variety of geographies including Australia, Europe and across Asia, have IPOs on SGX.
In fact, in the first six months of 2019, there was an increase in proportion of overseas companies listing on SGX. There were seven foreign company IPOs, accounting for 78% of the total number of IPOs, as compared to 33% of the total number of IPOs in the whole of 2018.
Trust IPOs accounted for 17% of the Singapore IPO capital market from 2016 to 30 June 2019. In the last 3.5 years, there were 10 trusts listed on the SGX, with 90% of trusts listed on the SGX being foreign trusts, including assets from the United States, China, Europe and Australia.
In terms of non-trust IPOs listed on SGX in the past 3.5 years, IPOs from Singapore saw the highest count and total amount raised.
“SGX is also an attractive listing destination of choice for both Singapore companies and foreign companies. A total of 29 foreign companies listed on SGX from 2016 to the first half of the year, accounting for 48% of the total number of IPOs that listed on the bourse over the last 3.5 years. There is also diversity of industry among these companies, ranging from businesses in real estate, consumer products, technology, media & telecommunications, energy & resources, life sciences & health care, financial services and industrial products” said Hwee Ling.
IPOs on SGX according to industries
From an industry perspective, the total funds raised in the Singapore capital market in the last 3.5 years were driven by the real estate sector, while the consumer products sector had the highest number of IPOs.
Real estate companies have been dominating Singapore’s IPO market over the years, having raised S$5.7 billion between 2016 to 30 June 2019, accounting for 62% of the total IPO amount raised in that period. In the first six months of 2019, this trend was relatively consistent, with real estate IPOs accounting for 96% of total proceeds raised.
The IPOs from the technology, media and telecommunications sector accounted for 27% of total amount raised since 2016, mainly due to the listing of Netlink NBN Trust in 2017. The consumer products sector had the highest count of 18 IPOs, accounting for 6% of total amount raised since 2016.
While the Hong Kong Stock Exchange (HKEx) continues to be attractive due to the perceived high valuation, the reality of factors such as the recent high rejection rates, lower subscription rate for IPOs and increasing professional fees are being felt. These sentiments suggest that businesses seeking to list in Hong Kong may consider SGX instead.
SGX is an international exchange with many foreign issuers, and is exposed to global economic disruption and uncertainties. Global factors such as the U.S.-China trade war, the risk of a hard Brexit in October 2019, the upcoming U.S. elections in 2020, as well as macroeconomic and political conditions in the Southeast Asia region will be the key factors impacting the Singapore capital markets for the rest of the year.
On the outlook of the Singapore IPO capital market for the remaining months of 2019, Hwee Ling said: “We expect sizeable mainboard listings coming onto the market, subject to geo-political factors that will impact the economy, as well as market performance. There is a pipeline of domestic and cross border IPOs from companies in the service-based sectors, and we remain confident that companies in service-based business will continue its growth with IPOs on the SGX.”
“The partnerships that SGX has forged in recent years with NASDAQ and Tel-Aviv Stock Exchange (TASE) have also created opportunities for companies in the technology and health care sectors to co-list in the exchanges, giving these companies access to global networks and capital markets as they progress with their expansion plans. Through partnerships like these, SGX is in a position to support high-growth tech companies from around the world, while broadening investment options for investors and adding to the vibrancy of Singapore’s capital market,” Hwee Ling added.
For additional statistics on Singapore’s capital market in the first six months of 2019, please download the report.
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