'They can't always say there's no IPO because there's no supply; there's no supply because there's no demand and round and round'.

Singapore is not the only market that has suffered in the last few years from dipping investors’ interest and a drop in IPOs. Contrary to the usual lament of a lack of liquidity, there’s plenty around here, with risk-free rates in Singapore more than one percentage point lower versus the US. 

“It is not like you have high rates and cheap assets for sale,” says Clifford Lee, global head of investment banking at DBS Group Holdings, one of the biggest IPO advisers in town. “There's ample liquidity, so much so that no one is doing a desperate sale of their assets,” explains Lee, the bank’s managing director and global head for investment banking.

He was speaking at the sidelines of the media briefing by the equities market review group on Feb 21, where a whole slew of measures was announced to revive the stock market where besides the dearth of IPOs, suffered from other woes.

Outgoing DBS CEO Piyush Gupta had earlier said the bank has a “very solid” pipeline of IPOs and has been so for a year. “The question is whether the market is ready for us to be able to take IPOs to market. If sentiment turns around, we can take things to market.” 

According to Lee, many owners of regional and Singapore growth companies prefer to list in the US, as they are drawn by the liquidity and depth. However, not all of them are able to do so.

On the other hand, pre-IPO investors of these companies, including the considerable private equity industry, need those companies to go IPO so that they can recycle their money into other investments.

Singapore, as a wealth management hub that draws in plenty of funds and deposits thanks to the strong Singdollar, is well-positioned to host many of these listings. “If you are not a Chinese company planning to list in Hong Kong, you would want an option to list somewhere. Singapore becomes a viable option,” says Lee.

He calls the comprehensive set of measures announced by the review group — with more to follow — a multi-pronged value proposition to help break the inertia.

“They can't always say there's no IPO because there's no supply; there's no supply because there's no demand and round and round,” says Lee.

Besides simpler regulations, the review group is handing $5 billion to fund managers to trigger secondary market demand. When the fund management companies attract more funds, they can build up the bench strength and bring more fund managers here. “You must have the whole ecosystem. If we do one without the other, it’s not going to be effective,” Lee says.

Read more about the equities market review group:

• Equities market review group targeting ‘mid-sized but good-sized’ companies to list in Singapore (Feb 23)
• New family offices may contribute $15 billion to local bourse this year, suggests Maybank's Wickramasinghe (Feb 23)
• Proposing equity market changes a ‘balancing act’ that comes with ‘trade-offs’: Chee Hong Tat (Feb 22)
• 'This has definitely made my Friday': Azure's Wong (Feb 22)
• Plenty of overseas liquidity to be tapped amid plan to nudge family office money into local equities: Lang (Feb 21)
• MAS and Financial Sector Development Fund to launch $5 bil programme, adjust GIP to revive Singapore’s equities market (Feb 21)
• ‘Unaddressed elephant in the room’: Reservations about MAS equities market review group’s proposals (Feb 17)
• SGX shares close 5.8% lower after MAS equities market review group’s first proposal (Feb 14)
• MAS’s equities market review group proposes tax incentives as part of measures to boost Singapore’s bourse (Feb 13)
• Revitalising SGX: Beyond liquidity injections (Feb 6)
• ‘Not practical’ to rely on sovereign wealth to support, sustain Singapore equities: Gan Kim Yong (Jan 2)
• SGX Group chairman calls for ‘bold and decisive actions’ to solve stock market’s ‘longstanding issues’ (Jan 2)
• Making the Singapore market great again (October 2024)
• Revitalising Singapore equities market ‘not an easy task’, says Chee Hong Tat (September 2024)
• MAS’s equities market review group holds first meeting, unveils 31 workstream members (August 2024)
• MAS launches review group to strengthen equities market; recommendations to come within a year (August 2024)