Singapore IPO funds raised in 2018 falls to second lowest since financial crisis

SINGAPORE (Dec 20): Funds raised through initial public offerings (IPOs) in Singapore have fallen to the second-lowest level in a decade since the global financial crisis in 2008, according to a report by PwC.

According to PwC’s Equity Capital Markets Watch – Singapore: 2018 year in review report, the Republic has seen a total of 15 IPOs so far this year, raising approximately $0.73 billion. This is a far cry from the $4.7 billion raised via 20 IPOs a year ago.

The worst IPO showing over the past 10 years was in 2015, which saw a low in market capital activity due to declining global oil prices and increased competition from other Southeast Asian bourses.

“Singapore’s capital market activity is not spared from market volatility due to the openness of our economy and there are significant foreign funds under management here. But we see a silver lining; we still think that the IPO pipeline remains optimistic in 2019 given Singapore’s pro-business environment,” says Tham Tuck Seng, Capital Markets Leader at PwC Singapore.

“SGX has in recent years also stepped up efforts to lure a greater number of IPOs. We can look forward to more fund raising activities in niche sectors such as real estate investment trusts (REITs) and business trusts (BTs), Healthcare and food and beverage (F&B) sectors,” he adds.

On the other hand, 24 companies delisted from SGX in 2018, similar to a year ago.

According to PwC, 30% of privatisation exercises between 2014 and August 2018 was done through voluntary delisting, with 50% through general offers and buyouts and 20% through scheme of arrangement.

“Delisting of a company could be attributed to a number of reasons, including where privatisation is likely a continuation of the parent firm’s corporation restructuring to streamline the group’s organisation and pessimism in the market which may have carried over from 2017, due to the continued declining trading volume in the local equity market,” says Tham.

He notes that SGX in November had launched a public consultation on rule changes to two aspects of voluntary delistings, which could make it more challenging for companies to undergo voluntary delisting.

“If these proposed rule changes are adopted, shifting the voting power from offerors and concert parties to minority and independent shareholders, and potentially compelling a better exit offer,” Tham says.

According to the report, there has also been relatively sizeable capital market activity in other Asean countries such as Thailand and Vietnam.

Thailand’s IPO market has recorded 21 listings so far this year, raising a total of US$2.4billion ($3.3 billion).

Investors have also been drawn to Vietnam's strong growth prospects, a privatisation drive by the government and successful private sector IPOs over the past two years.

Meanwhile, the Hong Kong Stock Exchange (HKEx) welcomed the world’s largest IPO in Aug 2018 as telecoms tower operator China Tower Corporation raised US$7.5 billion in IPO proceeds.

“As the capital markets for other Asean countries continue to develop and stabilise, these bourses may progressively attract new listings, particularly of domestic companies. We foresee this trend to forge ahead in 2019, bringing about increased regional competition which may very well increase the overall capital market activity in the region,” Tham says.

“SGX will have to continue to be innovative and promote its various market initiatives to further differentiate itself as a preferred strategic location for capital fundraising in Asia,” he adds.