4 July 2017

Singapore IPO activity in 2017 to surpass 2016

Singapore’s initial public offerings (IPOs) have raised US$329 million in 1H17 according to figures* by PwC Singapore, published today. The volume of IPO funds raised by the end of 2017 is likely to surpass 2016 levels with professional services leading the way as the sector with the most funds raised.

Two professional services IPOs – HRnetGroup and Shopper360 – have raised a total of US$134 million, ahead of the US$26 million raised in 2016.

Singapore Exchange’s (SGX) traditional strength, real estate industrial trusts (REITs) and business trusts accounted for 33% of Singapore’s IPO proceeds. The expected listing of NetLink Trust of up to US$1.6 billion will likely bring the sector up and build momentum for the rest of 2017, PwC said.

Tham Tuck Seng, Capital Markets Leader at PwC Singapore, said: “Singapore’s 1H17 numbers suggest that, apart from REITs and business trusts, niche sectors in the consumer space and professional services will be the next big growth opportunity for the local exchange. As SGX bolsters efforts in supporting technology startups, we can also expect to see more issuances from technology-driven activities.”

Follow-on (FO) performance in Singapore for 1H17 continues to be dominated by REITs and business trusts, accounting for 82% of total FO funds raised. In today’s rising interest rate environment, the equity market has become a vital fundraising platform to reduce interest costs. For REITs and business trusts, eight out of 10 are deploying the FO funds raised to acquire properties, with two using the funds to repay loans and borrowings.

Rising sectors such as consumer and professional services will continue the uptrend with Singapore’s position as one of the main business and financial services centres in the region. Following the signings of a series of memorandums of understanding with key players in the technology and startup ecosystem, such as A*Star’s EPTL, the Info-communications Media Development Authority of Singapore (IMDA) and PwC’s Venture Hub, PwC says technology and medical technology will also boost this growth.

Healthcare is one of the more well-developed sectors in Singapore with one of the world’s largest healthcare groups, IHH Healthcare, listed in the country. Singapore’s strong reputation as a medical centre of excellence in the region and the attractive market trading valuation for this sector (which sees the price-earnings ratio hovering in the range of 30 to 40 times) make it more attractive for healthcare players to list here. In addition to this, Singapore is expected to remain the choice listing destination for REITs and business trusts with notable interest from Chinese-based real estate players.

With the public consultation for dual class shares ending earlier this year, Singapore could become a more attractive location for listing in Asia. But with the Hong Kong Stock Exchange (HKEx) looking to introduce a third board with dual class shares, this has become a race to see which bourse is faster to the market, PwC notes.

SGX is a choice listing destination for Asian businesses and a springboard for international businesses to access the wider Asian region, PwC said. As markets in the region become more sophisticated, competition will likely get more intense, the company predicted.

Tham concludes: “For Singapore to remain ahead of the curve, we must continue to maintain our existing strengths (e.g. REITs and business trusts) and capitalise on new opportunities (e.g. the rise of new technologies). If we continue in this direction, we are confident Singapore will continue to be relevant for investors and market players in search of future growth.

“With Singapore’s pro-business environment and strong fundamentals – such as transparent regulatory regime, international exchange, and relatively quick time to market – Singapore remains a premier location for capital fundraising.”

*This study was conducted between 1 January and 30 June 2017 for IPOs, and between 1 January and 15 June 2017 for FOs, based on their first trading date. All market data is sourced from the stock markets themselves and has not been independently verified by PricewaterhouseCoopers.

posted from Bloggeroid