Business

Over $12b in market value lost through delisting in 2017

Trend likely to continue this year even as IPO pipeline looks robust: Experts

More than $12 billion in market value was erased last year due to companies relinquishing their listed status.

The figure is almost 40 per cent higher than the $8.7 billion in market value generated by new companies joining the Singapore Exchange (SGX) in the same period.

Experts said delistings will continue this year even as the pipeline for initial public offerings (IPOs) looks robust.

"Possible delistings include (firms) across all sectors," said Mr Max Loh, EY Asean and Singapore managing partner.

"The robust mergers and acquisitions environment and availability of funds will also result in companies being privatised."

Mr Tham Tuck Seng, PwC Singapore's capital markets leader, believes delistings will also be fuelled by Chinese companies' appetite for expansion.

Last year, three major Singapore-listed logistics groups were targeted by Chinese groups.

Global Logistic Properties was bought out by Nesta Investment Holdings, CWT was snapped up by HNA Group, and Cogent is being acquired by Cosco Shipping International.

BOUGHT UP

Ms Stefanie Yuen Thio, joint managing partner at TSMP Law, said companies involved in such delistings were victims of their own good performance, in which a start-up that grows into a listed company becomes so successful that an acquirer "comes along to buy it up".

"The SGX may have lost one listing but this is also a testimony of how well it has helped that company to grow," she said.

Ms Thio expects further consolidation in the logistics area.

Mr Barry Lee, partner and head of Capital Markets Group at KPMG in Singapore, said IPOs will be supported by the robust economic outlook this year.

"Even though there are available funds chasing after companies, giving them the option to raise private capital instead of an IPO, the local equities market looks promising and we are likely to see a healthy pipeline of listings this year," he added.

"A space to watch might also be SGX's recent collaboration with Nasdaq, and how SGX is using this to engage listed companies in developing their US investor base, which will in turn make the bourse more relevant and attractive."

Mr Tham expects the number of IPOs this year to at least match last year's.

Investment bankers said potential IPO candidates include companies owned by private equity funds such as Crystal Jade Group and Imperial Treasures. - THE STRAITS TIMES

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