SGX CEO on initiatives to attract SPAC listings to Singapore, tech IPOs

Auditorium of the Singapore Trade (SGX).

Roslan Rahman | AFP | Getty Photographs

SINGAPORE — The Singapore Exchange may obtain its first utility for a SPAC itemizing in “the subsequent couple of weeks,” Chief Government Loh Boon Chye instructed CNBC in an unique interview.

SGX earlier this month introduced new rules allowing SPACs to list on its platform. Loh mentioned the change is talking with potential sponsors and is seeing “a strong pipeline” of potential listings.

“We expect a few of them would come by way of by way of in search of out the submission within the subsequent couple of weeks,” the CEO mentioned.

“However clearly, the market has to carry for them to be on submission, and actually checklist and lift funds,” he added. “If the markets proceed to go up properly, we expect a few of these pipelines will crystallize into precise IPOs.”

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SPACs, or particular objective acquisition corporations, are shell corporations with none operations. They’re created and sponsored — normally by institutional traders — for the only objective of elevating cash by way of an preliminary public itemizing, and finally purchase one other working enterprise.

SPACs have been round for many years within the U.S. However they’ve exploded in reputation over the previous yr instead approach for personal companies to checklist on inventory exchanges since they bypass the standard IPO route which is usually a time-consuming and sophisticated course of.

SGX has for years sought to spice up IPO exercise in Singapore, however has struggled to clinch main tech listings which have been one of many hottest funding developments globally.

On Friday, the Singapore authorities introduced a bundle of initiatives to lure “promising high-growth” companies to list within the city-state.   

Attracting tech IPOs

The Covid-19 pandemic has prompted financial uncertainty, but it surely hasn’t dented optimism amongst traders considerably, mentioned Loh. Such sentiment in markets, together with efforts by the federal government and SGX, may assist enhance IPO exercise in Singapore, mentioned the CEO.

“With the present low rate of interest setting, traders have to seek for yield, for returns. And that continues,” he mentioned. “A low-rate setting usually is constructive for equities and, consequently, for capital elevating or fairness listings.”  

Within the first half of 2021, SGX had three IPOs with complete proceeds of 337 million Singapore {dollars} ($250.54 million), in line with information by Deloitte. That in contrast with 11 IPOs that raised round 1.34 billion Singapore {dollars} all through 2020, the information confirmed.

Whereas tech shares have garnered a whole lot of investor consideration previously yr, Loh mentioned corporations in “conventional sectors” have been resilient by way of the pandemic.

“Remember that these are robust sectors and inside that, in the event that they’re robust corporations, they do reward shareholders,” mentioned the CEO.

Singapore’s benchmark Straits Times Index is dominated by finance and property shares. It has outperformed a lot of its regional friends this yr, gaining round 7.8% as of Thursday’s shut.  

As corporations within the digital financial system sectors develop, it is solely “pure” that the SGX would see some adjustments to the combo of its listed corporations, mentioned Loh. He instructed CNBC he hopes the initiatives introduced by the federal government on Friday will deliver extra tech corporations to checklist on SGX.

“A few of these new financial system corporations that we talked about … working out of Singapore, working past Singapore on this a part of the world, we’re hopeful that a few of these will come to the market.”  

— CNBC’s Weizhen Tan contributed to this report. | SGX CEO on initiatives to draw SPAC listings to Singapore, tech IPOs


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