Singapore’s stock exchange will impose stricter admission rules for initial public offerings (IPOs) to woo bigger brand-name companies to list on its bourse, it said yesterday.
Singapore Exchange (SGX) chief executive Magnus Bocker said the new rules would allow the city-state to capitalize on the anticipated explosion in stock market launches coming to Asia in the next decade given the region’s economic rise.
By 2020, Asia is expected to account for 60 percent of IPOs launched globally, up from 40 percent in 2010, SGX data showed.
By imposing more stringent admission rules, the bourse hopes investors will be convinced of the viability of companies allowed to list, making the IPO a safer bet.
Under the new rules, taking effect on Aug.10, companies will only be allowed to list on the SGX if they fall under one of three categories:
First, issuers must have operated for at least three years and recorded a minimum consolidated pre-tax profit of S$30 million (US$23.9 million) for the latest financial year.
Second, firms must have a market capitalization of at least S$150 million based on the issue price if the firm has been in operation for three years and profitable in its latest financial year.
Should the firm not meet the above two criteria, it can still list if it has generated operating revenue in its latest completed financial year and has a market capitalization of more than S$300 million based on the IPO issue price.
Third, all companies are required to price their shares at a minimum of S$0.50 each.