Going public represents a significant milestone for any private company and with it brings numerous benefits; from an increased brand recognition and prestige to an improved access to capital markets and more liquidity. While the idea of getting listed may be exciting and a dream come true for most enterprises, the process of attaining it is no easy feat and involves several requirements and changes in a company’s operations.
Things to note
To begin with, there are 2 platforms in which companies can get listed on – the Mainboard or the Catalist of the Singapore Exchange (SGX).
The Mainboard caters to the needs of established enterprises. Mainboard-listed companies enjoy the prestige of an established marketplace and access to the widest range of institutional and retail investors.
The Catalist, on the other hand, caters to the needs of fast-growing enterprises. Companies seeking a primary listing on the Catalist must be brought to list by authorised Sponsors via an initial public offering (IPO) and reverse take-over.
The rules and requirements are different for each listing. Companies would have to carefully assess their business standing and determine their level of readiness in choosing between both listings.
The following are the different listing products available for application:
- Real Estate Investment Trusts (REITs)
- Business Trusts
- Global Depository Receipts
- Exchange Traded Funds (ETFs)
- Exchange Traded Notes (ETNs)
- Structured Warrants
- Daily Leverage Certificates (DLCs)
Before going public
Assess your company’s financial health and readiness for an IPO.
There is a substantial amount of cost involved in getting listed on the SGX. It is important for companies to ensure financial security before taking the plunge to go public to avoid affecting its business operations, getting delisted, or falling into debt. In some cases, going public may cause more harm than good for businesses. Hence, it is crucial for companies to ensure that the benefits outweighs the cost and be prepared for different circumstances that my arise in the future.
To be eligible to join the mainboard of the SGX, companies must fulfil one of the following quantitative requirements:
- Minimum consolidated pre-tax profit of at least S$30 million for the latest financial year with operating track record of at least 3 years;
- Profitable in the latest financial year, and has a market capitalisation of not less than S$150 million based on the issue price and post-invitation issued share capital with operating track record of at least 3 years; OR
- Operating revenue in the latest completed financial year and a market capitalisation of not less than S$300 million based on the issue price and post-invitation issued share capital. Real Estate Investment Trusts and Business Trusts who have met the S$300 million market capitalisation test but do not have historical financial information may apply under this rule if they are able to demonstrate that they will generate operating revenue immediately upon listing.
To be eligible to join the Catalist on the SGX, there is no minimum quantitative criteria required by SGX – Sponsors will use their own house deal selection criteria.
On top of that, there are also several listing fees payable which includes:
- Initial listing fees
- Annual listing fees
- Additional listing fees
- Mainboard processing fees (For Mainboard listing)
- Sponsors fees (For Catalist listing)
Gather a team of professionals skilled in IPOs
Going public imposes different management and operational requisites. Companies can expect a loss of control over operations and several added obligations from regulatory compliance to a complete reassessment of internal finance and business policies.
Thus, it is crucial for companies to employ a robust team that is well versed with the IPO process to assist them in navigating the complexities involved.
The following personnel are usually required in a sustainable IPO team:
- Underwriters
- IPO lawyers
- Reporting accountants
- Company’s management team
- Issuing managers (For Mainboard listings)
- Sponsors (For Catalist listings)
Conduct an audit on your financial reporting system
Another important aspect in preparation to go public is to ensure that your company’s financial reporting system is well organized and secured so as to guarantee accuracy and timeliness in delivering public filings and financial statements to future investors. Its policies should also be compliant with governmental regulations and be constantly reviewed and updated accordingly.
Therefore, before proceeding with the application, it is advisable for companies to first analyze their past financials to ensure that there are no mistakes and that everything is intact and ready to take on the new responsibilities involved.
The pointers above are non exhaustive and serves only as a general guide and insight to the IPO process in Singapore. If your company is interested in going public and would like to know more about the procedures involved, please contact us at info@rtasean.com. Our team is skilled in providing Pre-IPO advisory and has successfully assisted several companies in getting listed on the SGX. We can help you evaluate and meet the applicable standards and performance expected of a listed company.
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Disclaimer
While we do our best to ensure that all information presented is considered to be true and complete at the date of publication, its accuracy and reliability is subjected to changes. RT will not be held liable for the use of these information.
