Courting startups: Singapore lines up funding to boost IPOs

SINGAPORE - The Singapore government on Friday unveiled a S$1.5 billion fund as part of a package to attract listings to the city-state's stock exchange, aiming to boost its exposure to the region's booming tech sector.

The co-investment fund of the government and state investor Temasek will provide late-stage private finance and investment for initial public offerings (IPOs) on Singapore Exchange.

While Singapore is considered one of Asia's leading financial and business hubs, its bourse has struggled to capture big regional IPOs and has seen a wave of delistings.

Given its relatively small base of retail investors in a city of 5.7 million, some homegrown companies have headed overseas to take advantage of higher valuations and trading volumes.

"We have heard repeatedly that one area where Singapore can do better is in making our public equity market more conducive for innovative growth companies," Gan Kim Yong, minister for trade and industry, said on Friday (Sept 17) during an event at SGX.

"As more of our start-ups mature into regional and global companies, having a vibrant home equity market becomes more pertinent," he said.

SGX earlier this month unveiled new rules allowing listings of special purpose acquisition companies, or SPACs, marking the first Asian bourse to do so since the now-waning US SPAC frenzy began last year.

"The timing is right for this," said Vinnie Lauria, a founding partner at Singapore-based Golden Gate Ventures, about the new funding. "We continue to see a strong upward momentum in SPAC interest that should last for the next 12-18 months."

The new fund will be managed by 65 Equity Partners, a new fully-owned Temasek investment platform.

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Adding more firepower, the investment arm of the Singapore Economic Development Board, EDBI, will also establish an up to S$500 million "Growth IPO Fund" to invest in later-stage companies, with a view towards an SGX listing.

Contrasting with its current early-stage investment, the new EDBI fund will invest mostly at around two or more fundings rounds away from a public listing.

"This interagency initiative further sets Singapore apart as a capital markets hub," said SGX CEO Loh Boon Chye, adding that SGX will also offer customised services for issuers.

Rounding out the incentive package, the Monetary Authority of Singapore, the city-state's central bank and integrated financial regulator, said it will enhance the grants it provides to support SGX listings.

The regulator will also increase the co-funding of listing expenses for all companies and step up grants to hire equity research analysts to boost coverage of local-listed firms.

"We know that the initiatives we are launching today are no magic bullet," said Gan.

"But we believe they will blow new wind into the sails of our public equity market, and make SGX not just a viable but a compelling option for innovative growth companies seeking a public listing."