Above photo: Mr. Tan Kiat How, Chief Executive, IMDA gives his speech at SGX Centre 1 prior to the signing of the MOI between IMDA and SGX. Photo: Dean Koh/OpenGov Asia.
The Infocomm Media Development Authority (IMDA) of Singapore signed a memorandum of intent (MOI) with Singapore Exchange (SGX) to lower the barriers for IMDA-accredited companies to access capital markets. IMDA and SGX aim to catalyse more high tech IPOs1 (Initial Public Offering) and increase Singapore’s attractiveness as a venue for capital-raising.
Through Accreditation@IMDA (A@IMDA), launched in July 2014, IMDA seeks to provide promising Singapore-based tech product companies with resources and investment to help them build a track record locally, grow and compete on the global market. Through A@IMDA, the government puts its reputation behind the startup and assures buyers and stakeholders that they can rely on these products. IMDA helps put these tech start-ups in front of the right buyers and stakeholders, which helps to shorten the whole sales cycle.
Capital is an essential enabler to support the start-ups’ expansion and scaling up. Under the MOI, SGX will partner with A@IMDA to identify and galvanize key parties in the financial ecosystem, to support the accredited companies in their IPO journey, by lowering information barriers and costs for them. This includes facilitating pre-IPO funding, advising them on listing processes and preparing them for IPO listing.
By embedding some of the steps required to become IPO-ready into A@IMDA’s existing accreditation processes will help prepare the companies for listing.
IMDA-accredited companies as well as companies in A@IMDA’s pipeline will be able to engage services from the SGX-IMDA appointed market professionals, including IPO sponsors, law and audit firms, at a preferential fee structure. The services the companies can obtain include high-level assessment of their corporate governance standards, risk management, financial reporting systems and infrastructures. They will also be able to seek advice on listing requirements and corporate finance advisory matters.
The press release lists some market professionals who have committed to this programme. It includes RHT Capital Pte Ltd and Zico Capital Pte Ltd as IPO sponsors; Ernst & Young and KPMG as auditors; and Bird & Bird ATMD and Clifford Chance Pte Ltd as solicitors.
In addition, the partnership aims to enable investors to become aware of tech opportunities. It is hoped that the financial community’s understanding of the technology outlook, potential use cases and business models of the technology companies will be deepened. This would encourage greater investor participation from both public and private markets.
Mr. Tan Kiat How, Chief Executive at IMDA, said, “There are immense opportunities in the coming years for Singapore-based ICM2 companies as economies in the region transform and digitalise. The partnership between SGX and IMDA is an important step in deepening the collaboration between the technology and financial ecosystems, and enables both groups to benefit from this rapid growth. It also enables promising ICM companies to tap Singapore’s capital markets to scale up to the next phase of their growth.”
Currently, there is no leading exchange for international tech companies in Asia-Pacific. The Hong Kong Exchange (HKEX) has the largest tech companies listed, at an average market capitalisation of US$3b but 99% of its sector are Chinese/ Hong Kong based companies. The Taiwan exchange has the highest liquidity but 84% of its sector are semiconductors & hardware companies and 99.6% are Chinese/ Hong Kong based companies. Singapore's strengths include strong growth and liquidity for SMEs (<US$300m market cap) and strong valuations based on sales.
SGX has been providing support to tech startups and listing aspirants through education seminars and roadshows, investor education, identifying potential cornerstone investors and facilitating networking between issue managers, sponsors, regulators and professionals. SGX collaborates with government agencies including Economic Development Board (EDB), IMDA, Monetary Authority of Singapore (MAS), Spring Singapore and A*STAR's commercialisation arm, Exploit Technologies Pte Ltd.
Mr. Loon Boon Chye, Chief Executive of SGX, commented on the MOI, “Our collaboration with IMDA will foster a keener appreciation among Singapore technology firms of our capital markets as a source of funding and offer them the potential of expanding their business into the broader region. We hope to galvanise more partners in the financial ecosystem to engage with these fast-growing, innovative companies.”
1The first time that the stock of a private company is offered to the public
2Infocomm Media companies