Singapore IPO market thriving

Singapore was the world’s fastest growing initial public offering (IPO) market in the first five months this year, data from Thomson Financial show, and bankers expect even busier times ahead as the pall cast by the Severe Acute Respiratory Syndrome (SARS) outbreak lifts. 

The city-state was one of only three markets globally that posted growth in IPO proceeds in the first five months this year compared with the same period last year, the data showed. 

“It seems the momentum is picking up and this is reflected in subscription rates of recent IPOs where the public tranche was more than 100 times subscribed,” said Goh Chyan Pit, the managing director for equity capital markets at DBS Bank. 

IPO proceeds jumped more than 1,500% in the first five months of 2003 in Singapore, raising US$509.2mil. South Africa saw the second fastest growth, followed by Australia. 

“There is a window right now for the launching of IPOs. Of course, going forward, there will still be uncertainties, especially in the economic realm,” Goh said. 

Part of the growth is linked to China as companies raise funds to expand in Asia’s fastest growing market or China-based companies look for alternative markets to park their shares. 

But most of the increase came from the float of Singapore Post Ltd in May, which raised S$684mil for its owner, Singapore Telecommunications Ltd (SingTel). 

The dominant mail company’s IPO was the first major test of demand for new stock since the onset in March of SARS, which killed 31 people in Singapore until it was declared under control last week. 

Despite an economic slowdown exacerbated by SARS, six companies have launched IPOs in Singapore since March, and all were well subscribed.  

The most recent, a S$15mil IPO by China-based shoemaker Hongguo International Holdings Ltd, was 122 times subscribed, according to company officials. 

Bankers expect more issues in the coming months as the stock market strengthens. The Straits Times Index, Asia’s sixth best performing major index this year, is up 4% since the start of the year. 

“There are a number of very good companies in Singapore which should consider coming to market this year or next,” said Andrea Muller, the managing director and head of Singapore corporate finance at UBS Warburg. – Reuters  

  • Another perspective from The Straits Times, a partner of Asia News Network. 

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