IPO value slumps in first half of year, set to pick up later

SINGAPORE — Initial public offerings (IPO) on the Singapore Exchange (SGX) slumped by more than three quarters in the first half of the year from the corresponding period last year as companies stayed away despite the stock market rally.

However, a pipeline of deals is expected to boost new listing activity in the coming months.

IPO listings on the SGX mainboard as well as junior Catalist board amounted to US$300.3 million (S$417 million) in the year to date, down 75.6 per cent from the first half of 2016, Thomson Reuters data showed yesterday. Recruitment firm HRnetGroup’s S$174.6 million IPO is the biggest listing on the mainboard so far this year, while coffee shop operator Kimly’s S$43.5 million IPO is the largest on Catalist, the data showed.

Boosted by strong gains in property and banking stocks as well as an improving economic outlook, the benchmark Straits Times Index has risen 11.6 per cent this year, SGX data showed yesterday.

Ms Pan Jingyi, market strategist at IG Singapore, shrugged off the IPO lull in the first half of the year. “In terms of the number of IPOs, it had not been a drastic drop compared with the same period last year. Last year had also seen a strong start to the year for the local SGX, and that forms a high base for comparison,” she told TODAY. “Moreover, historical patterns do suggest that IPO activity picks up significantly towards the end of the year and the current statistics may not be representative of the broader economic situation. We have already heard a series of deals that are in the works, and a fairer comparison may be made towards the end of the year,” she added.

The IPO momentum is expected to accelerate in the second half of the year. Singapore’s largest listed company SingTel has received approval from the SGX to list Netlink Trust. NetLink Trust, which owns the fibre network that is the foundation of Singapore’s Next Generation Nationwide Broadband Network, plans to launch an IPO of S$2 billion to S$2.8 billion this year, according to Thomson Reuters. In the third quarter, Indonesian conglomerate Sinar Mas plans to launch its US$800 million business trust IPO on the SGX, while AEP Commercial Reit plans to launch its US$200 million IPO, it added.

In all, Singapore-domiciled companies tapping the equity capital markets (ECM) raised just US$1 billion so far this year, a 62.3 per cent decline in proceeds compared with the US$2.8 billion raised in the first half of last year despite an increase in the number of ECM issues, Thomson Reuters data showed.

Much of the equity capital raising by Singaporean companies was done through follow-on offerings with US$806.1 million in proceeds, up 102.7 per cent from the comparative period last year. Follow-on offerings accounted for 76.8 per cent of Singapore ECM so far this year, while IPOs captured a 23.2 per cent market share in terms of proceeds, according to Thomson Reuters data.

A total of eight IPOs were issued from Singapore companies in domestic and overseas stock markets so far this year, raising a total of US$243 million in proceeds, down 89.8 per cent from the first half of last year.