SGX, IMDA team up to boost IPOs for tech start-ups

IMDA chief executive Tan Kiat How and SGX chief executive Loh Boon Chye signing a memorandum of intent to help high-tech start-ups. With them is Minister for Communications and Information Yaacob Ibrahim.
IMDA chief executive Tan Kiat How and SGX chief executive Loh Boon Chye signing a memorandum of intent to help high-tech start-ups. With them is Minister for Communications and Information Yaacob Ibrahim.PHOTO: SGX

Shorter time to market, lower fees for IMDA-accredited firms

The Singapore Exchange (SGX) has started an initiative aimed at making it easier for high-tech start-ups to launch an initial public offering (IPO).

The move, which is in collaboration with the Infocomm Media Development Authority (IMDA), involves engaging such start-ups earlier on in the process of an IPO and for a lower fee.

Under the scheme, a pool of appointed sponsors, auditors and solicitors will dispense services at a preferential fee.

There are six firms in the pool now but the SGX plans to enlarge it.

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The initiative is aimed at the 17 start-ups that have been accredited by the Accreditation@IMDA (A@IMDA) programme, which started in 2014 and helps firms win more work with the Government to beef up their track record and market visibility.

Four or five of these are considering exit options, including an IPO.

To be accredited, start-ups have to be Singapore-based product owners rather than re-sellers. They have to own their own intellectual property and convince the IMDA of their ability to scale.

IMDA-accredited firms include HOPE Technik, a local poster boy for innovation, as well as Anacle Systems, which listed in Hong Kong last year.

Mr Chew Sutat, head of equities and fixed income at the SGX, said: "The point really is a lot of companies who think about coming to market often take a very long time and are not adequately ready to actually meet investors, organise themselves in the right way.

"What the A@IMDA does is provide these companies at an early stage the ability to think forward, prepare forward."

The key here is giving companies a shorter time to market, since other avenues already defray listing costs, Mr Chew said.

Enterprise agency Spring Singapore already offers Capability Development Grants for firms to improve governance and finances before they go public.

Mr Benjamin Mah, chief executive of V-Key, an IMDA-accredited mobile security provider, said he discusses exit options with his investors every other day, but welcomed the initiative: "This will help drive the number of tech companies willing to consider capital markets and make Singapore an attractive venue for capital raising."

Mr Eugene Wong, managing director of Sirius Venture Capital, also cheered the partnership: "What they're doing is good, it helps corporate development. Usually if a good venture capitalist (VC) comes in, they will do all this. So it bridges the gap if these tech companies don't have a VC.

"But what to me is more critical is that although Singapore has world-class tech start-ups, the challenge is how to grow sales and market size. They need to cross the $100 million revenue mark - if not, capital markets will not be so excited. Maybe partnerships with strong corporate shareholders can help."

A version of this article appeared in the print edition of The Straits Times on June 01, 2017, with the headline 'SGX, IMDA team up to boost IPOs for tech start-ups'. Print Edition | Subscribe