Four tech firms interested to launch IPOs next year

At least four tech firms are tipped to hold initial public offerings (IPOs) next year - a powerful rebuttal to the idea that such companies are not keen on listing here.

The four, which will be aiming for the secondary Catalist board, are likely to include a British-based fintech company, an e-commerce firm and one that develops software.

"We are seeing a rising trend where companies use technology as a foundation to build on traditional business models because of our focus as a Smart Nation," said Mr Mohamed Nasser Ismail, the Singapore Exchange's senior vice-president and head of equity capital markets for small and medium-sized enterprises (SMEs).

He told a briefing yesterday: "Most tech start-ups can't afford the time to grow organically. As competition heats up, they have to scale up very quickly.

"From start-up to being listable can take as little as 18 months. If their growth trajectory is that steep, their need to scale up is sooner than later, and Catalist serves that need."

The Catalist board is attracting more than just techies.

The number of Catalist sponsors hit 14 this year from nine a year ago and it is expected to increase next year, due to a fairly robust listings pipeline, said Mr Mohamed.

A full sponsor prepares firms for listing and helps find investors and funds. A continuing sponsor ensures listed companies comply with listing rules.

"As interest from clients that want to come to market grows, so the number of professionals interested in partaking in the offerings increases," Mr Mohamed said.

"Increasingly, the secondary board is also attracting SMEs seeking access to capital to scale up."

Apart from the tech firms, the new listings next year are expected to come from property development, real estate, consumer and healthcare sectors here, across Asia, Australia and Israel.

This year's Catalist debutants have been healthy with seven of the 11 firms that had IPOs still above their listing price.

"Recent Catalist listings have performed well on price and investor interest. Some of these listings also have very good investors backing them," Mr Mohamed noted.

"The Catalist market relies a lot on sponsors to prepare the firms for listing. It is also important that the companies are ready for the rigours of a public listing."

The Catalist board is also attracting mainboard-listed firms that cannot meet the minimum trading price (MTP) rule. So far, 15 have moved across.

All mainboard-listed companies must have a six-month average-weighted trading price of at least 20 cents.

Failure to meet the rule earns a spot on the watch-list and a three-year window to raise the share price or face delisting.

There are about 700 mainboard firms and 180 on Catalist.

"Companies move between the two boards for various reasons," noted Mr Mohamed. "Some feel they want to rightsize. If you're really small on the mainboard, it may not serve your interests well.

"The flexibility Catalist gives is better suited for smaller firms."

This article was first published on Dec 08, 2016.
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