How Singapore is Becoming Asia's Enterprise Financing Hub
Singapore has always been a big supporter of startups and enterprises. Between 2012 and 2017, the number of tech startups in the island nation grew from 3,400 in 2012 to 4,000. This boost can be attributed to a conducive business environment, ample government support, and a strong entrepreneurial community.
The government’s commitment towards entrepreneurial support was reconfirmed last November, when the Monetary Authority of Singapore (MAS) announced a US $5 billion private markets programme to fund local fund managers who invest in private enterprises and infrastructure projects. Now, the same body has announced an initiative that will boost Singapore’s status as a hub for equity listings.
At the UBS Wealth Insights conference on January 14 in Singapore, Heng Swee Keat, finance minister and an MAS board member, announced that the MAS will launch on 14 February a S$75 million Grant for Equity Market Singapore (GEMS) to serve as Asia’s centre for capital raising and enterprise financing. A three-year initiative, GEMS is aimed to help enterprises seeking to raise capital through Singapore’s equity market.
“Singapore has been working to enhance our private and public markets so that domestic and international growth enterprises are able to access different types of capital best suited to their needs. Results from our private market initiatives and bond grant schemes have been encouraging. GEMS will help strengthen Singapore’s position as the go-to venue in Asia for enterprises seeking growth financing,” Ng Yao Loong, MAS’ assistant managing director, said at the conference.
Strengthening the startup ecosystem
It will have three components—a Listing Grant to defray part of initial public offering (IPO) costs, a Research Talent Development Grant to strengthen equity research talent, and a Research Initiatives Grant to support crowd-sourced initiatives to propel Singapore's equity research system.
The Listing Grant, with different funding tiers, will encourage eligible enterprises across a range of sectors to list on the Singapore Exchange.
Enterprises in the tech sector seeking to list stand to receive the highest level of funding of 70 per cent of listing expenses with a cap of S$1 million. Those from high growth sectors may receive 20 per cent funding of its listing expenses, capped at S$500,000. In both the cases, the companies should have a minimum market capitalization of S$300 million. Enterprises from all sectors with no minimum market capitalization will also receive help, and can get 20 per cent of listing expenses, capped at S$200,000.
The MAS believes that enhanced research coverage, particularly for mid and small-cap enterprises, can help improve investor knowledge, which will, in turn, facilitate price discovery and liquidity.
The Research Talent Development Grant aims to groom a pipeline of equity research analysts and retain experienced research talent to initiate research coverage primarily of listed mid and small-cap enterprises. The grant will co-fund locals in the following areas: 70 per cent of the salaries for fresh graduates hired as equity research analysts; and 50 per cent of the salaries for re-employed experienced equity research analysts.
When it comes to the Research Initiatives Grant, the Authority will earmark funds to crowd-source initiatives that will propel the development of Singapore’s equity research ecosystem. Such initiatives can include publication of industry or sector primers, innovative ways to distribute research and disseminate enterprise information to investors.