Overview
Singapore's initial public offering market is starting to rebound from its 2018 performance as initial public offering deals in year to date climbed to $1.54 billion (US$1.11 billion) from nine initial public offering deals, surpassing share sales of $1.27 billion (US$920 million) raised from 24 floats in the previous year. That said, there are about 14 companies undergoing privatisation in 2019 with a few more being identified by research houses to be potential delisting candidates before year-end.
SGX has revised its rules on the delisting process in what industry commentators see as a move to slow down the pace, rather than stop them completely. More information is available at Delistings drag on Singapore's recovering IPO market from Singapore Business Review.
Voluntary delisting
The SGX Regco tweaked the voluntary delisting rules earlier this month, shifting the power to minority shareholders. As of 11 July 2019, to voluntarily delist a company, a party must make an exit offer that is not just reasonable, but also fair, in the opinion of the appointed independent financial adviser. The party making the offer and any other parties acting in concert with it should sit out the vote. This means that only minority shareholders and those not making or involved with the offer will vote on the voluntary delisting resolution. Full details may be found in these articles, Delistings on SGX expected to continue in H3 even at higher prices: analyses from The Business Times and SGX changes delisting rules to protect smaller investors from The Straits Times.
The mystical unicorn though, is whether there is indeed a fair and effective way to increase interest in maintaining a listed company's listing status whilst at the same time increasing investor interest in our listed equities.
Conventionally, a public listed company provides its promoters a platform for increased opportunity for liquidity, both debt and equity. This falls back on the premise that such entities are subject to the typical regulatory requirements for public listed entities and an enforcement regime to safeguard the interest of stakeholders.
With SGX Regco now requiring offerors and its concert parties to abstain from voting on voluntary delisting resolutions, this does make the voluntary delisting process more challenging and also provides a mouthpiece of the minority shareholders for such resolutions.
Incentivising the entities and investors who remain
The S$75 million Grant for Equity Market Singapore (GEMS) announced in February 2019 is one example. With listing costs being co-funded and defrayed, suitable companies seeking listing are supported by the Financial Sector Development Fund for initial "set-up" costs incurred in the initial public offering.
Perhaps on top of also policing the quality of our listed companies, locally we can also consider providing co-funding of fees incurred by investors to incentivise trading on the stock exchange.
Post-offering, investors are aware that watch-lists are created with minimum trading price/profit issues. Instead, how about also considering a list of performers who will enjoy co-funding of, or discounts to, their post listing fees? A hall of famers could potentially create more positive vibes, in contrast to reporting on a growing list of watch-list companies.
On the Hong Kong stock exchange, companies whose shares are suspended for at least one year will be permanently expelled from the exchange if they fail to address the issues that led to the suspensions and apply to resume trading within one year. To read more, please access this article, Twenty Suspended Firms Face Permanent Delisting in Hong Kong from Regulation Asia.
Boost thy stock, as the name suggests, involves boosting the support both at the listing and post-listing stages for companies and investors alike, giving an uplift to interest for local listings and local listed shares, without detracting from the scrutiny by regulators of their performance and compliance, altogether having the same goal to maximise long-term shareholder value and growing the stock of listed companies on our local bourse.
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