SGX inks 4 MOUs with industry partners to boost capital access

Head of SGX equity capital market for SMEs, Mr Mohamed Nasser Ismail, says SGX is considering a third board.
Head of SGX equity capital market for SMEs, Mr Mohamed Nasser Ismail, says SGX is considering a third board.

The spate of tie-ups between the Singapore Exchange (SGX) and various industry partners - with more to come - are being forged to act on recommendations of the Government's Committee on the Future Economy (CFE), a senior SGX official said yesterday.

The SGX has been on a signing spree, inking four memorandums of understanding (MOUs) since March with an equity crowdfunding platform, PwC's Venture Hub, the infocomm regulator and A*Star's commercialisation unit.

The goal of these tie-ups is to bolster Singapore's start-up ecosystem by boosting access to growth capital. Mr Mohamed Nasser Ismail, who heads SGX's equity capital market for SMEs (small and medium-sized enterprises), shed more light on the moves yesterday.

He told a gathering of reporters and Catalist sponsors: "The CFE has recommended the establishment of a private market... Certain exchanges have positioned themselves as Series B exchanges - is that where we want to be?"

Start-ups that reach a more mature level and have previously raised seed capital and an earlier "Series A" round of funding, proceed to launch a Series B funding round to further build the company.

While they often turn to venture capital and other private funds for the cash, some stock exchanges have stepped in as a platform for such fund-raising efforts.

"We think there are other solutions to that. One of the ways we think that we can be useful is to... play a role in preparing these companies in the right way, which may or may not necessarily mean that they need to go to IPO... These MOUs are designed for that," Mr Nasser added. A couple more MOUs are "in the works", he said.

The SGX is not ruling out the idea of a third board where shares of private companies could be traded. "We are working with some of you, in terms of thinking about how and when and if we should have a private exchange in Singapore," Mr Nasser told yesterday's gathering.

In February, the CFE, led by Finance Minister Heng Swee Keat, released a 109-page report that was a broad-brush plan for Singapore's economic future.

It suggested establishing "a more structured approach for enterprises that had raised capital in the private space to move into the public market" and "creating a private placement platform to better connect Asian SMEs to investors".

A week after the CFE report wrote that dual-class share structures should be permitted in Singapore, the SGX launched a consultation to give the dual-class shares issue another look.

To be sure, the SGX's increasing interest in the private markets also arises from the fact that that is where the action is. Mr Nasser said: "Exchanges worldwide are being disrupted."

But the SGX also used yesterday's bi-annual SGX Catalist Forum to share some encouraging data. Market participation on the Catalist board has risen over the year, giving Singapore's second board a one-year average daily traded value of close to $40 million, up 42 per cent from a year ago.

Participation from institutional investors has also risen, with institutional ownership of Catalist companies recording growth of almost two times since 2010.

A version of this article appeared in the print edition of The Straits Times on June 21, 2017, with the headline 'SGX inks 4 MOUs with industry partners to boost capital access'. Subscribe