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Singapore Exchange
Overview of Singapore’s Capital Market
Teng Yi Ling Associate Director, Equity Capital Market (SME)
May 2017
Agenda
1 Overview of Singapore and SGX
3 Tech Sector on SGX
2 Catalist – A Platform for Growth Companies
1
4 What It Means to be Listed
1. Overview of Singapore and SGX
2
Singapore is an International Business and Financial Hub
3
^Note: UHNWI refers to individuals with a net worth of over US$30m in assets *Source: Knight Frank Wealth Report (2016), Economist Intelligence Unit (2014), MAS Annual Report (2015/2016)
Asia’s Wealth Management Hub
Regional Hub for Institutional Investors
Home to major sovereign wealth funds such as GIC, Temasek, Norges Bank Investment Management, Canadian Pension Fund, Korean National Pension Service, Investment Company of People’s Republic of China, etc.
3rd Largest Concentration of Ultra High Net Worth Individuals (UHNWIs^)
Singapore has 2,360 UHNWIs, 3rd largest concentration of UHNWIs globally
Set to have the world's fastest growth in number of UHNWI in the next decade
0
50
100
150
200
250
2010 2020 2030
Size of Asset Management Cluster New York
Singapore
London Boston
100 = size of largest cluster in 2010
Half of the world’s population in close proximity (SEA + India + China)
76 avoidance of double taxation agreements 31 jurisdictions covered by FTAs
600m tons sea cargo handled 40 open skies agreements
Singapore’s strength lies in its connectivity
Fitch affirms AAA Rating
World’s BEST Business Environment* Over S$2.7 trillion AUM
Poised to be the 2nd largest global asset management hub by 2018
Over 3,000 investment professionals, 4,000 registered funds and 200 fund management companies
UK 80%
Non-UK
20%
London Stock Exchange
US 79%
Non-US
21%
New York Stock Exchange
China 95%
Non- China
5%
Hong Kong Stock Exchange
Japan 99.9%
Non-Japan 0.1%
Tokyo Stock Exchange
US 87%
Non-US
13%
NASDAQ
Singapore 63%
Non-Singapore
37%
SGX is the Most International Exchange
4
Source: World Federation of Exchanges and Companies’ website (Mar 2017), Singapore Exchange (Apr 2017)
Singapore Exchange 752 Listed Companies Market Capitalisation
US$722 billion
China 42%
Hong Kong 15%
Taiwan 3.99%
Japan & Korea
5%
Australia 3.99%
Europe & US 4%
Southeast Asia 25%
India 1.45%
Nearly 40% of all companies listed on SGX are overseas companies
SGX is an Attractive and Enduring Capital Raising Market
5
Strong investor support for SGX-listed companies in both primary and secondary markets
Source: Singapore Exchange (Dec 2016)
SGX-listed companies raised more than US$1 trillion through debt and equity
in the last decade
SGX-listed companies raised 60% more funds through the secondary market than
at IPO in the last decade
5.3 5.9
1.4 2.3
5.0 7.3
4.0 5.2
3.0 0.4
1.7
2.8
10.5
2.9
15.2
3.5
5.0
3.0
5.2
5.8
4.8 3.9
0
2
4
6
8
10
12
14
16
18
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Equity Funds Raised (US$ billion)
Funds Raised from New Listings Secondary Fund Raised
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Funds Raised on SGX (US$ billion)
Equities Bonds
SGX Offers Capital Raising Solutions for Companies at Varying Stages of Growth
6
Mainboard Catalist
Note: The above 1-3 points are applicable to retail debt securities but not wholesale debt securities
Key Benefits
Companies
Established branding
Access to wider range of institutional investors
More product types
IPO Review & Post-IPO Supervision
Established companies
SGX
Faster time to market
More headroom for secondary fundraising, acquisitions and disposal
Fast growing companies
Sponsors
Ready cash market Quotation & Trading
2. Catalist – A Platform for Growth Companies
7
8
Full Sponsors prepare issuer for admission into Catalist • Ensure that listing applicant has sufficient systems, procedures,
controls and resources to comply with the listing rule requirements
• Oversee and be actively involved in the preparation of relevant documents and ensure compliance with rule requirements when listing
Continuing Sponsors ensure issuer is compliant with rules • Advise issuer on all rule and corporate governance matters • Ensure that the issuer is in compliance with the rules and make
proper disclosures
Issuer must retain the services of a Full Sponsor for at least 3 years after Catalist listing
To be listed and remain listed on Catalist, issuers would require the services of a Catalist Sponsor
Listing
Pre-Listing Post-Listing
Catalist – Sponsor-supervised regime
16
18
16 31
11
Catalist
AIM
ASX
GEM
TSX
13
15
12
19
12
Catalist
AIM
ASX
GEM
TSX
121%
60%
89%
67%
52%
Catalist
AIM
ASX
GEM
TSX
140%
62%
87%
65%
49%
Catalist
AIM
ASX
GEM
TSX
Catalist
9
Fundraising Total Funds Raised (S$M)
Competitive median PE compared to other leading growth platforms
Most liquid platform among comparable growth platforms in the world
Source: Bloomberg, Exchanges’ website & Singapore Exchange (Dec 2016)
20
08
-20
12
(5
Yea
rs)
Liquidity Weighted Average Turnover Velocity
Valuations Median PE
20
13
-20
16
(4
Yea
rs)
468
1,031
1,420
1,748
76
602
+72% 1,964
3,381
Catalist fundraising activities have greatly accelerated in last 3 years
Primary Funds (IPOs & RTO)
Secondary Funds (Placement & Rights Issues) Debt
72%
28%
Geographies
67%
33%
2008-2012 2013-2016
Index Performance
Singapore
Non-Singapore
Hong Kong Malaysia Indonesia
Israel Japan Korea Sweden
Australia China Indonesia Malaysia
Strong valuations, liquidity and fundraising activities on Catalist since inception
Source: BT 12 Apr 2017
10
Mainboard Catalist
Classifications of Major Transaction
Classification of Major Transaction: Any of the relative figures as computed on the bases set out in Rule 1006* exceeds 20%
Classification of Major Transaction: Where any of the relative figures as computed on the bases set out in Rule 1006* exceeds: - Acquisition: 75% but less than 100%; or - Disposal: 50%
Note: * Bases in Rule 1006 include: (i) Net Asset value of assets to be disposed (vs net asset value); (ii) net profits attributable to the assets acquired or disposed (vs group’s net profits); (iii) Consideration given or received (vs Issuer’s market capitalization); and (iv) Number of equity securities issued as consideration (vs number of equity securities previously in issue)
For further details of the listing rule, please refer to SGX’s Listing Manual.
buy
or sell
Catalist Rules are designed for Growth Companies
Different classifications of major transactions for Catalist companies allows larger acquisitions or disposals without obtaining shareholder approval
Limits to aggregate number of shares and convertible securities that may be issued Larger share issue mandates for companies listed on Catalist
Mainboard Catalist General Mandate: Not more than 50% of the total number of issued shares excluding treasury shares
General Mandate: Not more than 100% of the total number of issued shares excluding treasury shares
Pathway For Transfer To Other Developed Exchanges
11
SGX offers the flexibility for transfer to other Developed Exchanges1 with no additional ongoing requirements imposed
Catalist Mainboard Developed Exchanges1
• Minimum 2 years listing period on Catalist
• Meet Mainboard’s minimum quantitative criteria and shareholding spread requirement
1Based on the market/country classification developed by MSCI and FTSE
• Conversion of Mainboard listing to Secondary listing
• No additional on-going requirements by SGX for Developed Exchanges1
• Equality of treatment for shareholders across Exchanges will be required
• Primary listed on other Exchanges & Secondary listed on SGX • SGX offers the versatility of expansion to other markets by imposing no additional on-
going listing requirements for subsequent listings on Developed Exchanges1
0.2
4.0
0
1
2
3
4
12
Company Name Listing Date Date of Transfer
Sectors
Ezion Holdings Sep 2000 May 2010 MOE
Attilan Group Feb 2001 Aug 2010 Financials
Sapphire Corp Nov 1999 Feb 2011 Construction
Silverlake Axis Mar 2003 Jun 2011 Technology
Mencast Holdings Jun 2008 Dec 2011 MOE
Kreuz Holdings Jul 2010 Oct 2012 MOE
SIIC Environment Holdings Mar 2005 Nov 2012 Utilities
Top Global Jun 2001 Dec 2012 Real Estate
Swissco Holdings Nov 2004 Jan 2013 MOE
Interra Resources Jan 2003 Jan 2013 MOG
Oxley Holdings Oct 2010 Feb 2013 Real Estate
Chasen Holdings Aug 2000 Feb 2013 Transportation
Hafary Holdings Dec 2009 Jun 2013 Consumer
Goodland Group Oct 2009 Jun 2013 Real Estate
Zhongmin Baihui Retail Group Jan 2011 Sep 2013 Consumer
Perennial Real Estate Holdings Mar 2006 Dec 2014 Real Estate
Halcyon Agri Corp Feb 2013 Jun 2015 Consumer
Keong Hong Holdings Dec 2011 Aug 2016 Construction
Duty Free International Feb 2011 Oct 2016 Consumer
Source: Bloomberg, Singapore Exchange (Apr 2017)
Note: Kreuz Holdings delisted on Mar 2014. Its market cap is as of 28 Feb 2014
IPO MCap
Mcap
28 Apr 2017
FY 2012 Revenue
FY 2016 Revenue
Total Market Capitalisation Growth: >3X Total Revenue Growth: >2X
Funds raised At IPO
Total Secondary Funds Raised in the last 5 Years: 20X
Bill
ion
s (S
$)
9% Rights Issue
28% Share placement
63% Bonds Issue
Funds raised From 2011-2016
2.5 2.2
8.8
5.0
0
2
4
6
8
10
Bill
ion
s (S
$)
19 transfers from Catalist to Mainboard since 2008 Fast growing companies are able to leverage on SGX to gain access to capital consistently
0
40
80
120
160
2012 2013 2013 2014 2015 2015 2016 2016 2017
Mill
ion
s
0
200
400
600
Nov-15 Mar-16 Jul-16 Nov-16 Apr-17
Mill
ion
s
40
60
80
100
Jul-16 Oct-16 Jan-17 Apr-17
Mill
ion
s
0
30
60
90
120
Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17
Mill
ion
s
20
40
60
80
Jul-16 Oct-16 Jan-17 Apr-17
Mill
ion
s
020406080
100120
Apr-16 Jul-16 Oct-16 Jan-17 Apr-17
Mill
ion
s
Strong Performance of Catalist New Listings
United Global
S$57 Mn Market Cap 28 Apr 2017
Advancer Global S$38 Mn IPO Market Cap 11 Jul 2016
Grew by 50%
Source: Bloomberg, Singapore Exchange (Apr 2017)
Acromec S$27 Mn IPO Market Cap 18 Apr 2016
Grew by 115%
S$58 Mn Market Cap 28 Apr 2017
HC Surgical
13
S$71 Mn IPO Market Cap 8 Jul 2016
S$85 Mn Market Cap 28 Apr 2017
Grew by 20 %
S$160 Mn IPO Market Cap 9 Nov 2015
Grew by 175%
S$439 Mn Market Cap 28 Apr 2017
Jumbo Group
S$40 Mn IPO Market Cap 3 Nov 2016
Grew by 118%
S$87 Mn Market Cap 28 Apr 2017
DeClout Limited
S$51 Mn IPO Market Cap 24 Oct 2012
Grew by 120%
S$112 Mn Market Cap 28 Apr 2017
3. Tech Sector on SGX
14
Singapore’s Smart Nation Push
15
Commitment to commercialisation of
technology innovation
US$2.4B
Dedicated Government Support Investment in the smart nation programme over
the next 5 years
US$14B
INVESTORS UNDERSTAND THE SECTOR Strong investor interest in Technology Sector due to
appreciation of its support for disruptive technologies
Funding for innovation and
technology research
US$2.1B
Sources: MPA & EDB website, *Menon Business Economics (2015). : Global Innovation Index (2015); Global Professionals on the Move (2013); The World Economic Forum Global Information Technology Report (2015); The World Economic Forum Global Competitiveness Report (2016); Duff & Phelps’s Transaction Trail Report (2016); Economist Intelligence Unit (EIU) Digital Transformation Index (2016)
Strong Private Investments
World Class Infrastructure
Private Equity and Venture Capital
Investments in 2016
US$3.5B
Total Mergers and Acquisitions Deal
Value in 2016
US$83B
1st Asian Digital Transformation Index
Highly supportive and coordinated set of government
policies in support of technology and
entrepreneurship.
Top 2 Most Competitive City
Recognised for strong goods and labour markets; leading globally in terms of
financial market development.
Private R&D Expenditure in 2014 - grew 7.3%
Annually over 10 years
US$5.2B
More than 80 of the top 100
software and services companies have
presence in Singapore
Best IP Protection (Asia)
Well supported by infrastructure and
incentives to encourage innovation
#1 City to Access Quality Talent
2017 Global Startup Ecosystem found Singpaore provides easiest access to
skilled engineers
Top 15 software companies
have regional or Asia-Pac headquarters in
Singapore
• Strong private support enables startups to stay private longer
Performance of Tech Sector on SGX
Private and confidential 16
Tech+Telco* Stocks Listed on SGX
53%
Source: : SGX, Bloomberg & SGX StockFacts (data as of 28 April 2017). Indicative GICS ® Sector performance weighed to market capitalisation at quarter end, in SGD and dividend inclusive. GICS® Banks Industry used in place of GICS® Financials Sector & GICS® Real Estate Management & Development Industry and REIT Industry used in place of GICS® Real Estate Sector *Includes IT & Telecommunication Services Companies base on MSCI Global Industry Classification Standard (GICS®)
S$82B Combined sector market capitalisation
85
Weighted average returns in a five-year period, outperforming STI’s 41%
Competitive Comparative Returns and Strong Valuations
33.3
25.9 22.4
16.5 13.2 10.7 10.2 9.4 7.3 7.1
2.8 1.5 0
10
20
30
40
IT Materials R.E. Man &Dev
Industrials Cons. Discre. REITs Banks Energy Cons.Staples
Utilities Telco HealthCare
Tech Sector the Strongest in the SG Market YTD with 33.3% Total Return
15% Weighted average returns in 2016, outperforming STI’s 4%
33% Weighted average returns in 2017 YTD, outperforming STI’s 11%
17
Tech Sector in Asia-Pacific No Leading Exchange for International Tech companies in Asia-Pacific
15
16
10
14
HKEx
ASX
TWSE
SGX
Weighted Average EV/EBITDA
78%
87%
133%
76%
HKEx
ASX
TWSE
SGX
Weighted Average Free Float TOV
46%
23%
25%
57%
HKEx
ASX
TWSE
SGX
1Y Average Market Cap Growth
ASX has strongest valuations (especially since 68% are Software & Services companies) but HKEx & SGX close
TWSE has highest liquidity but 84% of its sector are Semiconductors & Hardware companies and 99.6% are CN/TW companies
3
0.4
0.6
0.7
HKEx
ASX
TWSE
SGX
Average Market Cap (US$b)
HKEX has largest tech companies listed but 99% of its sector are CN/HK companies
SGX has highest 1Y average market cap growth despite lowest average revenue growth over the period
Average size Valuations
Liquidity Performance
Source: Bloomberg (Apr 2017)
18
Singapore’s Present Strengths
7
13
3
10
HKEx
ASX
TWSE
SGX
Weighted Average EV/Sales
17%
27%
18%
69%
HKEx
ASX
TWSE
SGX
1Y Average Market Cap Growth Strongest performance
despite lowest average revenue growth rate during period
Strong Valuations based on Sales
Note: 22% of ASX’s listcos did not report sales in past 12 months (cf. SGX’s 6%)
Strong growth and liquidity for SMEs (<US$300m Market Cap)
80%
86%
204%
122%
HKEx
ASX
TWSE
SGX
Weighted Average Free Float TOV
Strong Liquidity despite smaller absolute size of sector
Source: Bloomberg (Apr 2017)
19
Singapore’s Present Strengths
11
22
9
15
HKEx
ASX
TWSE
SGX
Weighted Average EV/EBITDA
53%
25%
29%
60%
HKEx
ASX
TWSE
SGX
1Y Average Market Cap Growth Strongest performance
despite lowest average revenue growth rate during period
Strong Valuations based on EBITDA
Note: 59% of ASX’s listcos did not have positive earnings in past 12 months (cf. SGX’s 21%)
Strong growth and valuation for cross-border listings
23%
14%
48%
39%
HKEx
ASX
TWSE
SGX
% Companies with >50% Non-Domestic Revenue Large no. of companies with >50% non-domestic revenue despite smaller absolute size of sector
Source: Bloomberg (Apr 2017)
4. What It Means to be Listed
20
Enhanced Business Capabilities after Listing
Corporate Governance, Internal Control
Robust framework to address the firm’s financial, operational, compliance and information technology risks
Corporate Restructuring
Maximise returns for investors
Strategic operational and financial improvements that enhance efficiency
Investor Relations
Effectively communicates a company's long-term strategic vision to its stakeholders
Capabilities for future fund-raising activities
Risk Management Framework
Capabilities to address material risks the firm faces
Financial Reporting Framework
Strengthened financial reporting system
Stress-tested financial model
Meeting listing standard enables companies to be better placed for growth
Benefits of a Listing
Attract Strong Talent Pool
To be Professionally Managed and Transparent
Raise company’s profile
Distribute Shares to Employees, Vendors and Business Partners
For Easier Follow-on Funding
Access to Global Investors
21
22
Corporate Governance & Internal Control
Investor Relations Financial Reporting Framework
Disclosure on Interested Person Transactions
Disclosure on Material Corporate Transactions
Continuing Obligations after Listing
“Before we listed … I put everything on the table and was VERY transparent to my six brothers. When we listed the company, I just assume that now I have more than 1,000 brothers and do exactly the same.”
Executive Chairman & Managing Director of an SGX-listed Family Business
A public listing involves a change in the way you see your business
From ‘ownership’ alone to separate concepts of ‘ownership’, ‘control’ and ‘management’
The development of processes and procedures to improve disclosure, transparency, and accountability to the public
Mindset Change
Adrian Koh, Partner, EY
Gail Ong, Head of Capital Markets Practice, WongPartnership
Gerald Ong, CEO, Prime Partners Corp Finance
Michael Lints, Venture Partner, Golden Gate Ventures
Teng Yi Ling, Associate Director, SGX (Moderator)
23
Panel Discussion
sgx.com
Thank you
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© SGX Ltd, January 2017
For more information, please contact: Associate Director, Equity Capital Market (SME) Teng Yi Ling [email protected] +(65) 6236 5191 Associate Director, Equity Capital Market (SME) Neo Wee Ling [email protected] +(65) 6236 8198