The Singaporean government through its state-run investment firm Temasek Holdings is planning to set up a $1.1 billion fund to encourage more companies to go public. The fund is aimed at bolstering the nation's stock market, which has been in gradual decline due to slow trading and listings.
Apart from the $1.1 billion that will be put up by Temasek, the investment arm of the Economic Development Board will also be creating a separate $370 million fund aimed at supporting companies looking to list their shares in the stock market in the next two to five years.
Officials said Friday that the two funds will mainly be used to invest in high-growth companies and to support initial public offerings. The country's stock exchange operator, Singapore Exchange Ltd., will also be involved in implementing the growth strategy. Over the past few years, trading and listings in the country have significantly slowed down.
Singapore's Ministry of Trade and Industry, Gan Kim Yong, said the funds will not be a "magic bullet" to address the stock market's problem but it should provide an incentive to at least get the ball rolling. He added that the fund, which was announced earlier in the week, should make Singapore a more attractive location for listings for both international and local companies.
"We know that the initiatives we are launching today are no magic bullet. But we believe they will blow new wind into the sails of our public equity market," Gan said.
Analysts at Phillip Securities Research said the funds are a step in the right direction but Singapore still has to implement supporting measures to accelerate listings and trading growth.
Gan clarified that the funds are not being set up for the country to have high valuations or market caps. He said the funds are meant to promote and elevate promising startups and entrepreneurs in Singapore and across the region. He added the listings of these companies should "blow new wind into the sails" of Singapore's public equity market.
Through the fund, Companies will be able to reduce the cost of going public through measures such as a greater reduction in the companies' listing costs and a provision of customized capital market solutions.
