Singapore introduced a new funding package to support high-growth companies raising capital in the country’s public equity market.
The package, which includes over S$1.5 billion (US$1.09 billion) in funding, comprises four initiatives:
- Anchor Fund @ 65 – aimed at supporting high-growth businesses in their public fundraising in Singapore’s public equity market;
- Growth IPO Fund – aimed at helping late-stage private enterprises;
- Grant for Equity Market Singapore (GEMS) – a scheme to help enterprises looking to list in Singapore; and
- Strategic Partnership Model – provides solutions ranging from private market fundraising to liquidity building.
Another initiative Singapore launched to attract more firms to its stagnating initial public offering (IPO) market is allowing the listing of special purpose acquisition companies (SPACs). SPACs are essentially shell companies and have no commercial operations. They are formed by investors — who are called sponsors — with the sole purpose of raising money through an IPO to acquire another company, also known as a de-SPAC transaction.
The Singapore Exchange (SGX) has been traditionally dominated by companies in the finance and property industries and with only three listings in the first half of 2021 (a 50 percent decrease from 2020), the government hopes these packages can attract more enthusiasm in the IPO market. Hong Kong — considered the rival financial hub — saw over 40 new listings during the same period.
Anchor Fund @ 65
The Anchor Fund @ 65 is a new co-investment fund established by the Singapore government and Temasek, a global investment fund headquartered in Singapore and owned by its government.
The fund is starting with S$1.5 billion (US$1.09 billion) in its first tranche and aims to support promising high-growth enterprises in their public fundraising in Singapore’s public equity market. Furthermore, the fund will provide pre-IPO financing and support businesses in their journey towards a public listing.
Growth IPO Fund
The Growth IPO Fund focuses on late-stage private enterprises that are only a few more funding rounds away from listing (typically a Series B or later). With an initial tranche of S$500 million (US$366 million), the fund is being supported by the Singapore Economic Development Board (EDB), who will mainly focus on partnering with companies to grow their operations in Singapore and have the potential to be future technology innovators and market leaders.
Grant for Equity Market Singapore
The GEMS scheme was first introduced by the Monetary Authority of Singapore (MAS) in 2019 to help strengthen Singapore’s equity market through grants that help issuers defray some of the listing costs.
MAS will enhance the GEMS scheme by expanding the grants available for businesses. These are:
- Listing grant – through this grant, MAS will increase the co-funding for listing expenses. Companies with a larger market capitalization (more than S$1 billion (US$732 million)) can qualify for 70 percent co-funding of up to S$2 million (US$1.4 million), while smaller companies can qualify for 70 percent co-funding of up to S$1 million (US$732,000); and
- Research Talent Development grant – MAS will increase the funding quantum for experienced professionals to S$6,000 (US$4,397) per month, with the funding duration for such professionals who are Singaporean citizens to two years. MAS will also expand the parameters to include researchers that serve accredited investors and broaden the scope of the research coverage to qualify.
Strategic Partnership Model
Under this scheme, the SGX will provide tailored solutions to support the various needs of high-growth companies. These solutions are:
- Potential users can tap into the SGX’s network and partnerships to access private market capital before listing;
- Businesses can access the SGX’s panel of market makers and active traders to enhance trading liquidity; and
- Benefit from SGX’s media partnerships and platforms to engage the community as well as reach out to a global audience of 13 million.
This article was first published by AseanBriefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected] for more support.