SINGAPORE – Companies in the Asia-Pacific including Singapore are increasingly looking to raise funds overseas, especially in the United States, drawn by hopes of strong valuations, liquidity and proximity to their target markets.

This is even as initiatives have been taken in recent years by local bourses such as the Singapore Exchange to entice companies to list on them.

In the first nine months of 2023, the US saw a year-on-year rise of about 160 per cent in initial public offering (IPO) proceeds to US$19.3 billion (S$26.4 billion). Out of the 113 IPOs it attracted, 96 were by local companies and 17 by overseas ones. 

Compared with the same period in 2022, the US was the only market that attracted more foreign IPOs in the first nine months of 2023 from companies in Japan, Singapore, Malaysia, South Korea and mainland China, according to professional services consultants EY.

This was a stark contrast to 2022, when cross-border deals as a proportion of total global IPOs reached a 20-year low and Chinese companies stayed away from US stock exchanges due to stricter regulatory demands.

“However, the floodgates have reopened this year, thanks to greater clarity over regulations, as Chinese companies adapt to a ‘new normal’ established by authorities in both the US and China,” EY said in a report looking at global IPO trends for the third quarter of 2023.

Globally, the past nine months of 2023 saw a 5 per cent year-on-year fall in the number of IPOs to 968. Funds raised tumbled 32 per cent to US$101.2 billion.

The Asia-Pacific presented a mixed picture, with IPO volume falling 8 per cent and proceeds down more than 40 per cent, even as governments fight to stimulate economic growth and IPO activity through initiatives such as reducing stamp duty taxes.

Recently, Minister of State for Trade and Industry Alvin Tan told Parliament that Singapore, like other stock exchanges, is also facing the trend of local companies looking to list on large overseas markets like the US despite various initiatives taken in recent years to enhance the attractiveness of the local stock market. 

In September 2021, Singapore announced the $1.5 billion Anchor Fund @ 65, a co-investment fund by the Government and the Republic’s investment company Temasek, to help promising high-growth companies raise capital through public listings here. 

It also unveiled a $500 million EDBI Growth IPO Fund to invest in high-growth enterprises at the late stage, and prepare for an eventual IPO in Singapore. 

Mr Tan, who was speaking on behalf of Deputy Prime Minister and Minister for Finance Lawrence Wong, said the Monetary Authority of Singapore had enhanced its grant scheme to defray listing costs and develop Singapore’s equity research ecosystem. 

SGX has also been seeking partnerships with the regional bourses to enhance its attractiveness as a gateway for Singapore companies and international investors to access regional capital markets and opportunities. 

In May, SGX launched a Thailand-Singapore Depository Receipt to broaden access to capital and markets.

“Overall, our initiatives aim to provide a more enabling environment for companies to consider listing on SGX,” Mr Tan added. 

“At the same time, we recognise that there are limits to how these measures can directly influence listing decisions.”

Companies considering possible public listings have several commercial objectives in mind.

They may decide to list in places like the US, where they can secure the best valuations for their shareholders.

They may choose a venue that gives them better exposure to key target markets. For example, a company planning to expand its business in China may choose to list in either Hong Kong or China, or in some instances, both. 

Mr Tan said if the Government takes an overly prescriptive approach by supporting promising start-ups on the condition that they list locally, it might end up imposing a rule that might be at odds with the growth plans of the company or the founder. 

Similarly, if the Government prescribes that global investors that are in Singapore must invest certain amounts in only locally listed companies, it would effectively constrain their investment mandates and the country might end up losing a larger pool of investors that adopt a regional or global view. 

Ohmyhome, a property transaction platform, was the first Singapore-based company listed in the US in 2023. It was listed on the Nasdaq stock exchange in March. 

Home-grown Simpple, which provides an automated management tool for building maintenance, surveillance and cleaning, also chose to list on the Nasdaq as part of its global expansion plan.

Simpple founder and chief executive Aloysius Chong told The Straits Times earlier that the New York-based exchange was a suitable listing venue given its strong liquidity and the greater brand visibility it brings, which would enable the company to attract more talent.

Singapore ride-hailing company Ryde has lodged its preliminary prospectus to list on the New York Stock Exchange.

Super app Grab, consumer Internet company Sea and property listing website PropertyGuru are also listed in the US. 

Speaking at SGX’s annual general meeting last Thursday, group chief executive Loh Boon Chye said the exchange continues to strengthen its capital-raising platform through a multi-pronged approach. This ranges from enhancing liquidity to facilitating secondary listings. 

“It is a matter of time before confidence and demand for liquidity returns,” he added.

SGX has attracted five listings so far in 2023. Of the five, oil palm plantation company TSH Resources is from Malaysia, while wireless solutions provider Comba Telecom Systems is from Hong Kong. In 2022, SGX attracted 14 IPOs.