ASX attractive to Singapore tech startups: Experts
SINGAPORE – July 2015 – A number of Singapore firms are choosing to list in Australia, where small technology firms tend to trade at higher valuations. Industry players said the ASX will continue to attract Singapore tech startups, so long as investors here remain conservative.
The Netccentric Group is the latest Singapore name to list on the ASX. It made its debut earlier on Jul 6, following an IPO which raised A$12.5 million.
The Singapore-based social media firm – whose stable of bloggers includes Wendy Cheng, popularly known as XiaXue – now has a market value of over S$50 million, or about 50 times earnings.
CEO and co-founder Cheo Ming Shen said Netccentric would have been valued at a much lower S$20 to S$25 million had it chosen to list on SGX’s Catalist board. Mr Cheo said the company decided to list on ASX as Australian investors “tend to be more savvy” about technology and internet stocks.
“There are several comparables there for them to relate to, and they are willing to price favourably as compared to Singapore, where there are less investors who are savvy about this kind of stocks,” he said.
Analysts have said Australia has a large pool of investors who are familiar with the tech sector and are willing to pay large premiums for the most promising firms. In contrast, SGX tends to attract listings from the region in areas such as REITs and commodities.
Other Singapore-based firms that have successfully listed on ASX include real estate portal iProperty and social media firm MigMe.
PUSH FACTORS ALSO AT PLAY: LAWYER
While higher valuations may be a pull factor for an ASX listing, a corporate lawyer said there are also push factors at play. For one, SGX’s tougher listing rules may deter some promising startups.
Partner at Gibson, Dunn & Crutcher LLP Robson Lee said: “Not many would want to go to Catalist because of the continuing requirements for a sponsor. Also, some of these high-tech companies may aspire to grow very quickly, and having a Catalist listing may actually be seen as a handicap. So I do see this as one of the reasons why I see a flux of companies going to the Australian market.”
Mr James Lin, a partner at law firm Harry Elias, which advised Netccentric on its ASX listing, said that while Australia offers higher valuations, firms should ideally have business operations there in order to attract potential investors.
“In the case of Netccentric, they have a healthy and expanding operation in Australia, so this was not an issue. But for companies that do not have actual business operations in Australia, they might come across as opportunistic and accordingly might not be well-received by investors in Australia,” said Mr Lin.
iBosses, an entrepreneurship training and consultancy provider, plans to join the small but growing number of Singapore firms Down Under. The company’s Group CEO Patrick Khor said: “As of today, there are a few (Singapore) companies already listed there. We feel that it is a good trend to list in Australia, especially for a new, fast growing company.”
iBosses has filed its preliminary prospectus with ASX, and hopes to list in the coming weeks.