Funds raised from Singapore IPOs halve in H1 2020: Deloitte

FUNDS raised from initial public offerings (IPOs) in Singapore fell 53.2 per cent to S$725 million in the first half of 2020, from S$1.55 billion a year ago, according to data from Deloitte on Monday.

The Republic saw six IPOs in the first half of 2020 recording an IPO market capitalisation of S$1.19 billion, down from nine IPOs on year with an IPO market capitalisation of S$2.24 billion.

The funds raised in H1 2020 were mainly from two real estate investment trusts (Reits) listed on the Singapore Exchange's mainboard. The remaining four were listed on the Catalist board, with the gross amount raised ranging from S$3 million to S$19 million.

Out of the six IPOs in H1 2020, five took place in the first quarter. The five IPOs raised S$706 million, 18 times the S$39 million recorded a year ago.

This was before the Covid-19 situation "took a heavy toll" on the health of the equity market in the second quarter where IPO listings fell to zero. After Singapore's "circuit breaker" was lifted, the Singapore capital market saw one IPO listing.

"The unprecedented impact of Covid-19 was certainly felt on Singapore's IPO market just as it had caused volatility in the global market to reach its highest levels since the global financial crisis," said Tay Hwee Ling, disruptive events assurance leader at Deloitte South-east Asia and Singapore.

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With no end in sight, the long-haul reality of the Covid-19 pandemic could be a game changer for the IPO market, Deloitte said in its report.

Ms Tay added that IPOs of companies dealing with essential services might emerge as a response to opportunities thrown up by the Covid-19 pandemic, giving the IPO market "a shot in the arm".

The report added that market volatility will continue to dominate the IPO market for the remainder of 2020.

That said, there is still an appetite for fundraising in the market, Ms Tay said, adding that Deloitte continues to receive enquiries for potential Reit listing and Catalist listing based in the Asia-Pacific region.

"Companies are waiting for the right time to enter and when this happens is largely dependent on a combination of factors," she said.

These factors include how well professional parties leverage technology during this Covid-19 period of remote working to complete financial due diligence and IPO preparation work for the listing process, as well as company valuation and how the Covid-19 pandemic will impact their bottom line.

Catalist companies need a platform to continue to grow and mainboard companies tend to focus on valuation, Ms Tay said. She added that if the price is not right, these companies are willing to wait.

"That said, Singapore is better prepared with measures that are implemented to achieve an efficient containment of Covid-19 as well as reducing economic disruptions," Ms Tay said.