SGX cool to idea of third market board

It says Mainboard and Catalist, and other services it offers, can meet needs of local firms

A suggestion by business leaders that Singapore needs a third share market board to cater for "middle-class" firms has received a cool response from the Singapore Exchange (SGX).

SGX said yesterday that the two boards - Mainboard and Catalist - as well as other services it offers, can meet the needs of local companies at different stages of their development. Its remarks came after the Singapore Business Federation (SBF) suggested in a position paper to the Government on Wednesday that Singapore should consider developing a third board for firms that are stronger than those listed on the junior board, but not big enough for a mainboard listing.

Creating a new category for these firms so they can be compared with their peers will bring them greater market attention, the SBF said.

SBF chief executive Ho Meng Kit said the middle platform could include firms with $300 million in revenues, compared with Catalist firms, which he said generate around $50 million.

The SGX's head of equities and fixed income, Mr Chew Sutat, told The Straits Times via e-mail yesterday: "Catalist targets growth companies, and caters to a wide range of companies with varying market capitalisation, under a sponsor-supervised regime.

"Mainboard targets companies that can meet the quantitative criteria, and want access to a wider range of institutional investors."

Support for SBF's proposal has not been overwhelming.

National University of Singapore Business School's Associate Professor Mak Yuen Teen said: "I don't know how many of our current SGX-listed companies would have the turnover mentioned by SBF, but if we use a $300 million to $1 billion market capitalisation, there are only about 15 per cent of listed companies that fall within that. We are talking about maybe 125 companies or so."

Prof Mak also questioned the feasibility of creating another board, "given Singapore's relatively small domestic market and the challenges in getting quality foreign listings".

But Mr Paul Lim, chief executive of security firm Secura, said the idea was "worth exploring further".

The Catalist board attracts a wide range of listings, he said, from loss-making upstarts to firms like Secura that have established recurring revenue.

"A third board may allow funds and investors to make a clearer distinction between companies and help those on the in-between board grow faster," said Mr Lim.

Some questioned the SBF's strong focus on stock market solutions to fund business expansion.

"I think there are more practical ways, and I think we have more important things to look at. It's not the goal for every Tom, Dick and Company to be listed," said CIMB Private Bank economist Song Seng Wun.

"(The SBF is) looking at how to inject a bit more life into the stock market and bankers would love this to tide over the current dry spell. But it must be attractive from the standpoint of investors as well."

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A version of this article appeared in the print edition of The Straits Times on January 08, 2016, with the headline 'SGX cool to idea of third market board'. Print Edition | Subscribe