Over $12b in market value lost through delisting last year

A GLP property in Hefei, in China's Anhui province. GLP, which was bought out by consortium Nesta Investment Holdings, was among three major Singapore-listed logistics groups targeted by Chinese groups last year.
A GLP property in Hefei, in China's Anhui province. GLP, which was bought out by consortium Nesta Investment Holdings, was among three major Singapore-listed logistics groups targeted by Chinese groups last year.PHOTO: GLOBAL LOGISTIC PROPERTIES

More than $12 billion in market value was erased last year due to companies relinquishing their listed status.

The figure is almost 40 per cent higher than the $8.7 billion in market value generated by new companies joining the Singapore Exchange (SGX) in the same period.

Experts say delistings will continue this year, even with the pipeline for initial public offerings (IPOs) looking robust.

"Possible delistings include (firms) across all sectors," said Mr Max Loh, EY Asean and Singapore managing partner.

"The robust mergers and acquisitions environment and availability of funds will also result in companies being privatised," he added.

Mr Tham Tuck Seng, PwC Singapore's capital markets leader, believes delistings will also be fuelled by Chinese firms' appetite for overseas expansion.

Last year, three major Singapore-listed logistics groups were targeted by Chinese groups.

A space to watch might also be SGX's recent collaboration with Nasdaq, and how SGX is using this to engage listed companies in developing their US investor base, which will in turn make the bourse more relevant and attractive.

MR BARRY LEE, partner and head of Capital Markets Group at KPMG in Singapore.

Global Logistic Properties (GLP) was bought out by consortium Nesta Investment Holdings, CWT was snapped up by HNA Group while Cosco Shipping International is acquiring Cogent.

Ms Stefanie Yuen Thio, joint managing partner at TSMP Law Corporation, said companies involved in such delistings were victims of their own good performance.

"It's a success story when a company that grows from a start-up to a listed company is so successful that an acquirer comes along to buy it up," she noted.

"The SGX may have lost one listing but this is also a testimony of how well it has helped that company to grow."

Ms Thio expects further consolidation in the logistics area as large international investors develop an appetite for home-grown companies.

"We may also see more consolidation in the shipping as well as oil and gas sectors as they continue to restructure," she added.

Mr Barry Lee, partner and head of Capital Markets Group at KPMG in Singapore, said IPOs here will be underpinned by the robust global economic outlook this year.

"Even though there are available funds chasing after companies, giving them the option to raise private capital instead of an IPO, the local equities market looks promising and we are likely to see a healthy pipeline of listings this year," he added.

"A space to watch might also be SGX's recent collaboration with Nasdaq, and how SGX is using this to engage listed companies in developing their US investor base, which will in turn make the bourse more relevant and attractive."

PwC's Mr Tham expects the number of IPOs in 2018 to at least match last year's.

Investment bankers said potential IPO candidates include companies owned by private equity funds such as Crystal Jade Group and Imperial Treasures.

Crystal Jade is majority-owned by L Catterton, a private equity fund backed by luxury goods giant LVMH, while Imperial Treasures is owned by Malaysian private equity firm Navis Capital Partners.

Other candidates include Italian restaurant operator Pastamania and seafood processing company Fassler Gourmet.

The healthcare sector, which has relatively attractive valuations, may also provide market debutants. Last year saw only one healthcare stock - Clearbridge Health - listed.

SGX Research said Singapore's 10 largest capitalised healthcare stocks averaged 3.3 per cent price gains for the first five sessions of 2018 following an average 13.2 per cent increase in 2017.

While some have blamed higher listing costs and onerous compliance demands for the slew of bourse exits, experts argue that the SGX remains an attractive platform for fundraising.

A version of this article appeared in the print edition of The Straits Times on January 15, 2018, with the headline 'Over $12b in market value lost through delisting last year'. Print Edition | Subscribe