In July this year the Singapore government reported Q2 GDP growth of 19.3% and revised its 2010 growth forecast from 13% to 15%.
With the strong economic base and infrastructure including very clear transparent laws and regulations, Singapore is one of the favorite place for companies seeking listing. Presently there are about 650 and 138 companies listed on the main board and the sponsor market Catalist. Total market capitalisation stands at S$721 billion for both markets.
Though the market capitalisation is not large as compared to markets like Japan and Hong Kong, Singapore however has shown to be a very resilient market less susceptible to huge swings, as the regulators are very strict on ‘market rigging’ and insider dealings. Additionally in the last couple of years in particular, the Singapore market has successfully insulated itself to the regional bourses of China, Hong Kong and Japan’s wide swing.
Looking at the following comparative market indices over the last 12 months tells the story:
|As at June 2009||As at June 2010||12 months (%change)||12 months (High)|
|Hong Kong Hang Seng||18,378.73||20,248.90||10.18%||23,099.00|
|China - Shanghai||3,008.15||2,398.37||(20.3%)||3,478.00|
|China - Shenzhen||962.27||945.29||(1.8%)||1,556.00|
The indices confirm the stability of the Singapore market and the growth. As of June, most regional markets are down with the exception of China where the Shanghai index is down 20% and the Shenzhen down by 2%. With full economic recovery, the market is down which indicate the concern on the uncertainty of the economy moving forward.
If one takes a closer look Singapore has attracted 318 foreign companies which are listed on the main board and Catalist. Of which 158 companies are large Chinese groups which have chosen Singapore. More recently, the Companies from Hong Kong, Vietnam and Thailand also have sought listing in Singapore.
In 2008, the Singapore Exchange revamped the second board Catalist and modelled it along the UK AIM where companies are listed via sponsorship and the Exchange do not ‘approve’ the listing but the sponsor takes on the role and responsibility lodge the prospectus with the Exchange.
The detail listing requirements are expanded below:
Main board listing requirement:
|Alternative 1||Alternative 2||Alternative 3|
|Pre-tax profits||Cumulative pre-tax profit of at least S$7.5m over last 3 financial years, with pre-tax profit of at least S$1 million in each of those 3 years||Cumulative pre-tax profit of at least S$10m for the latest 1 or 2 years||NA|
|Market capitalization||NA||NA||Market capitalization of at least S$80 million based on issue price|
|Operating track records||3 years||1 or 2 years as the case may be||NA|
|Continuity of management||3 years||1 or 2 years as the case may be||NA|
1. An issuer must also satisfy one of the following requirements:
- Profitable in the latest financial year (pre-tax profit based on latest full year consolidated audited account. Have an operating track record of at least 3 year and a market capitalisation of not less than S$150million based on the issue price.
- With operating revenue in the latest financial year and a market capitalisation of not less than S$300million based on the issue price.
2. Issue Price
- The issue price of the equity securities (other than convertible equity securities) offered for subscription or sale, for which a listing is sought, must at least S$0.50 each.
3. Issuer must have been engaged in substantially same business and have been under substantially same management throughout the period for which relevant profit test applies.
4. If group made low profits or losses in 2 years before application due to specific factors which were of temporary nature and such adverse factors have either ceased or are expected to be rectified upon issuer‘s listing, application may still be considered.
5. In determining profits, exceptional or non-recurrent income and extraordinary items must be excluded.
6. SGX will normally not consider application for listing from issuer which has changed or proposes to change financial year end if it is of opinion that purpose of change is to take advantage of exceptional or seasonal profits to show better profit record.
Catalist listing requirement:
|Pre-tax profit||Nil. Business is expected to be viable and profitable, with good growth prospects|
|Operating track record||A company with no track record has to demonstrate that it requires funds to finance a project or develop a project, which must have been fully researched and costed|
|Continuity of management||NA|
The listing applicant must be sponsored by an approved Sponsor of Catalist. Catalist companies are listed based on the Sponsor’s assessment that they are suitable. SGX does not set any minimum quantitative entry criteria, but Sponsors will use their own deal selection criteria.
Listing in Catalist requires applicant to submit an “Offer Document” compared to “Prospectus” in main board. Sponsor can obtain an exemption from the Monetary Authority of Singapore (MAS) for the relevant sections in the Securities & Futures Act (SFA) as it may not required in an “Offer Document”.
However, there is no change to the disclosure standards in Catalist, as it is the basis for investors to make informed decisions. Therefore, the Offer Document will be subject to the same disclosure requirements as a prospectus. To support this disclosure requirement, provisions relating to civil and criminal liability in the SFA will still apply to an Offer Document.
The prospectus exemption also means that the requirement to lodge and register the Offer Document with MAS will no longer apply. Instead, it will be lodged with SGX. Offer Documents will be posted on SGX’s Catalodge website, for a period of at least 14 days. This will provide an avenue for the public to air any serious concerns they may have, and act as an additional safeguard.
2. Working Capital Statement
The Sponsor and directors of the company must include a statement in the Offer Document that the company has sufficient working capital for the present requirements and for at least 12 months after IPO.
3. Shareholding Spread
To promote healthy post-IPO trading activity, the shareholding spread requirement is set at 15% of issued capital in public hands with a minimum of 200 shareholders.
4. Moratorium Period
To secure the commitment of promoters and pre-IPO investors, restrictions on the sale of their shareholdings will apply.
Shareholding Spread & Distribution
|Market capitalisation (S$’m)||Proportion of post-invitation share capital held in public hands||Number of shareholders||Total Offer Size (S$’m)||Distribution|
|Mainboard||<300||25%||75||At least 40% of invitation shares or $15 million whichever is lower, must be distributed to investors each alloted not more than 0.8% of invitation shares or $300,000 worth of shares whichever is lower|
|300-400||20%||500||75-120||At least 20% of the invitation shares must be distributed to investors each allotted not more than 0.4% of the invitation shares|
|400-1000||15%||500||>120||No requirement applicable|
|>1000||12%||500||>120||No requirement applicable|
|Catalist||Any Size||15%||200||As above|