SGX CEO on initiatives to attract SPAC listings to Singapore, tech IPOs
Auditorium of the Singapore Exchange (SGX).
Roslan Rahman | AFP | Getty Images
SINGAPORE — The Singapore Exchange could receive its first application for a SPAC listing in “the next couple of weeks,” Chief Executive Loh Boon Chye told CNBC in an exclusive interview.
SGX earlier this month announced new rules allowing SPACs to list on its platform. Loh stated that the exchange was in contact with potential sponsors. He said the exchange has a “strong pipeline” of possible listings.
According to Loh, “We believe some of them will come through in terms seeking out the submission within the next few weeks.”
He added, “But, obviously, they have to wait for the market to submit them, and actually list and raise money.” If the markets rise, then we believe some of those pipelines may become actual IPOs.
SPACs, or special purpose acquisition companies, are shell companies without any operations. They are created and sponsored — usually by institutional investors — for the sole purpose of raising money through an initial public listing, and eventually acquire another operating business.
The U.S. has had SPACs for many decades. SPACs have been around for decades in the U.S.
SGX, which has been trying to increase IPO activity in Singapore for many years, has not succeeded in securing major technology listings. This is a significant investment trend that has become increasingly popular worldwide.
On Friday, the Singapore government announced a package of initiatives to lure “promising high-growth” companies to list in the city-state.
Attracting tech IPOs
The Covid-19 pandemic has caused economic uncertainty, but it hasn’t dented optimism among investors significantly, said Loh. The CEO said that such sentiments in the markets and efforts of the government as well as SGX could boost IPO activity here.
With the low interest rate environment currently in place, investors must search for yields and return. This trend will continue,” he stated. Low rates are generally favorable for equity and capital raising.
According to Deloitte data, SGX saw three IPOs in the first half 2021 with total proceeds of $337 million Singapore Dollars ($250.54 Million). This is compared to the 11 IPOs, which totaled 1.34 trillion Singapore dollars in 2020.
Although tech stocks are attracting a lot more investor attention over the last year, Loh stated that companies from “traditional sectors”, have been resilient to the pandemic.
These are very strong industries and if there’s a strong company within those sectors, shareholders will be rewarded,” Loh said.
Singapore’s benchmark Straits Times Index is dominated by finance and property stocks. The SGX has gained around 7.8% since Thursday’s close, outperforming many of its regional counterparts.
Loh said that as companies within the digital economy sector grow, it is only natural for the SGX to see changes in its mix of listed companies. CNBC spoke to Loh about his hope that the Friday announcements by the government will result in more tech firms being listed on SGX.
“Some of these companies in the new economy that we spoke about… operate out of Singapore and beyond Singapore in this region of the world. We hope some of them will make it to the market.”
— CNBC’s Weizhen Tan contributed to this report.