In a bid to raise Singapore's status as an enterprise financing hub, a $75 million grant will help defray costs of enterprises hoping to list on the Singapore bourse, support research initiatives and subsidise the salaries of Singaporean equity research analysts.
The Grant for Equity Market Singapore (Gems) was launched yesterday by Finance Minister Heng Swee Keat at a UBS Wealth Insights conference at Marina Bay Sands Expo and Convention Centre. Funded by the Monetary Authority of Singapore (MAS) and administered by the Singapore Exchange (SGX), the initiative will kick in from Feb 14 and cease in 2022.
To support the fund-raising needs of companies when they choose to list on the SGX, a listing grant will be given out to eligible companies - including foreign enterprises but excluding real estate investment trusts (Reits) and business trusts. This will help defray costs such as legal and underwriting fees.
Eligible firms can get up to 20 per cent of the funds for their listing expenses up to a cap of $200,000. Those in high-growth sectors with a minimum market capitalisation of $300 million will enjoy a higher limit of $500,000. Technology companies with a $300 million market cap will be able to use the grant to co-fund their expenses by 70 per cent, up to $1 million.
In addition, a research talent development grant, primarily for listed small-and mid-cap enterprises, will fund 70 per cent of the salaries of fresh graduates hired as equity research analysts, and half of the salaries of re-employed and experienced analysts.
The MAS will earmark funds for research that supports the equity research ecosystem. This is particularly important as more and more small-and mid-cap companies get listed here, said head of research in equities at DBS Bank Janice Chua.
"There is a concern that the number of analysts in the industry is insufficient to keep pace in the expansion of the universe of listed companies," she said. "It may mean that many small-and mid-cap companies may not get the valuations they deserve due to a lack of coverage."
On average, there are more than 15 analysts covering each of the top 30 listed companies, while the next 200 companies have an average of between two and six analysts covering each stock. PricewaterhouseCoopers capital markets leader Tham Tuck Seng hopes Gems would spur research coverage that will generate higher investor interest in these listed companies.
The grant comes after a dismal performance for SGX initial public offerings (IPOs) last year, having raised around $730 million with 15 IPOs - the second-worst showing since 2008. In 2017, $4.7 billion was raised with 20 IPOs.
Strong competition from other regional exchanges for big listings and the volatile financial markets as a result of the ongoing United States-China trade conflict contributed to the decline. Several big players, such as gaming company Razer, picked Hong Kong Stock Exchange as a listing venue in recent years.
With Gems, Allen and Gledhill partner Tan Tze Gay said issuers, which are also increasingly concerned about listing costs, now have another reason to choose SGX.
On the grant's preference for tech firms, SGX head of equities and fixed income Chew Sutat said it will help accelerate the development of Singapore in the future economy.
OCBC investment research head Carmen Lee said: "While the Singapore market is recognised as being well represented by Reits listed here, there are comparatively fewer high-growth or technology companies and (Gems) will be a catalyst to draw companies to consider the Singapore market."