Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Note: Singapore is becoming the preferred destination for technology companies going global.
As a bridge connecting Asia and the world, Singapore offers technology companies greater opportunities to access global opportunities and identify early-stage growth drivers.
Large companies such as TikTok and Shein have moved their headquarters to Singapore; many large model companies have registered entities in Singapore to launch products for overseas markets; and startups have also established headquarters here, such as Mindverse, which recently raised US$5 million in overseas funding.
For technology entrepreneurs, once their products are globally deployed, using global capital to fuel growth becomes the next challenge.
Source: Founder Park
Singapore's financial dynamism is increasingly attracting attention. The Singapore Exchange (SGX) is also gaining recognition from a growing number of domestic companies for its high degree of internationalization and strong connectivity, and is regarded as one of the preferred listing destinations.
According to statistics, as of June 30, 2023, 40% of companies listed on SGX were foreign companies, of which 35%—about 70 companies—were from Greater China. The Singapore market is also becoming an important choice for many technology and energy companies, both for secondary listings and even primary listings.
Venturing into global markets and obtaining corresponding capital support and endorsement is a highly specialized topic. Therefore, at this month's Founder Park workshop, we invited Xie Caihan, Chief Representative for Greater China at the Singapore Exchange, to discuss the possibilities of listing in Singapore.
Guest introduction:
Xie Caihan: Head of Greater China Capital Markets, Singapore Exchange
Some key points
- In Singapore, companies can continue to use the connections, resources, and networks built in China while effectively expanding into Southeast Asian and international markets.
- Singapore's Chinese population ratio of up to 70% helps Chinese entrepreneurs adapt culturally.
- The advantages of a secondary listing on SGX are clear: if a company is first listed in a developed jurisdiction, it can streamline its subsequent multi-market listing process and significantly reduce compliance costs, as it only needs to meet the first listing standards without having to comply with additional SGX requirements.
- Given Singapore's relatively small market size, we encourage companies to list in Singapore only after reaching medium-to-large scale; smaller companies may become zombie stocks.
- In Singapore, a market capitalization of S$300–500 million is already considered mid-to-large cap, while companies with market capitalizations of S$500 million to S$5 billion are more likely to attract investor coverage in Singapore than in the Hong Kong market.
- Overall, the Singapore IPO listing cycle from launch to completion is about 9 to 12 months, while a secondary listing can be completed in as little as six months.
01 Why Choose an SGX Listing?
1. Why Do Chinese Companies List on SGX?
The reasons Chinese companies choose to list on SGX include the following:
- Continuing to leverage the advantage of a comfortable distance;
- Rebuilding brand awareness and enhancing international influence;
- Opening investment channels for international investors;
- Greater likelihood of index inclusion, which attracts new investors and promotes secondary market trading;
- A platform for connecting with Singapore, Southeast Asian, and international government resources;
- Improving listing efficiency and enhancing listing certainty;
- Building an offshore liquidity pool to provide investors with additional asset allocation options;
- Enjoying policies favorable to companies, directors, supervisors, and senior management.
Singapore offers a unique advantage that no other market can provide: a comfortable distance that allows Chinese companies to continue leveraging their resources backed by China. In Singapore, they can continue to use the contacts, resources, and networks accumulated in China while effectively expanding into Southeast Asian and international markets. By listing in Singapore, these advantages and resources can be maximized.
2. Family Trusts and High-Net-Worth Individuals Establishing a Presence in the Singapore Market
Family offices have also grown rapidly in Singapore, expanding from just over 100 in 2018 to more than 1,400 in 2023, with the application pipeline continuing to grow.
Therefore, for investors who wish to allocate capital to Singapore, local investments will be a priority. Due to tax incentives, investors will focus their funds on the stock market, which in turn will attract more companies to Singapore's capital market and bring more capital into Singapore-listed companies.
3. SGX Has Built a Deeply Collaborative Ecosystem
In recent years, SGX has established a number of funds aimed at nurturing and attracting quality companies to list on SGX.
The Anchor Fund is a fund managed on a commercial basis by 65 Equity Partners, an investment platform of Temasek Global Holdings, with a total size of S$1.5 billion. It focuses on investing in high-potential companies with a market capitalization of more than S$1 billion, with a single investment amount of approximately S$100 million to S$150 million. It is mainly deployed at the slightly earlier stage of late-stage Pre-IPO or as a cornerstone investor, guiding companies toward listing on SGX.
The Growth IPO Fund is a fund established by an investment company under the Singapore Economic Development Board. It is slightly smaller in size but invests at an earlier stage, beginning from Series B rounds, with single investments of around S$10 million, providing critical funding support to startups and growth-stage companies.
In addition, SGX has established close cooperation with many exchanges around the world, including the Stock Exchange of Thailand (SET), and uses innovative products such as depositary receipts (DRs) to enable cross-market trading, which both enhances trading liquidity and promotes brand internationalization for SGX-listed companies. For companies seeking a broader financing platform, SGX also provides seamless direct access to international markets such as the New York Stock Exchange and Nasdaq, ensuring that companies can flexibly choose their listing venue according to their development needs and achieve the best match between capital and market.
Note: S$1 is approximately RMB 5.5.
4. Singapore Capital Market Grant Scheme—Listing Grant (GEMS)
The listing grant is provided by the Monetary Authority of Singapore and can help reduce the burden of listing. If a company chooses to list on the SGX Mainboard, excluding underwriting fees, the estimated cost is approximately S$4 million, while costs on Catalist are relatively lower.
Companies with a market capitalization exceeding S$1 billion may receive a grant of up to S$2 million; those below this threshold may also receive a subsidy of S$1 million. Although Catalist-listed companies are relatively fewer and smaller in scale, SGX still provides a subsidy of at least S$300,000.
5. Southeast Asia Benefits from the Belt and Road Initiative and Is on an Upward Trend
Singapore's rise within Southeast Asia is particularly striking, attracting many companies to establish a presence there. Its GDP has grown steadily, making it fertile ground for nurturing unicorn companies.
With the deepening implementation of China's Belt and Road Initiative, countries along the routes have benefited extensively, especially enterprises in Southeast Asia. Singapore, as the most economically developed country in Southeast Asia with the most comprehensive legal system, has become a choice for Chinese companies expanding overseas.
Singapore provides legal protection and an environment close to Chinese culture, offering Chinese entrepreneurs a reassuring platform for business development. In particular, Singapore's Chinese population ratio of up to 70% facilitates cultural adaptation for Chinese entrepreneurs. Various types of global enterprises have set up regional headquarters in Singapore, enjoying the free flow of technology, knowledge, and talent. Singapore also facilitates the free movement of capital to other Southeast Asian countries such as Malaysia, Thailand, and Indonesia, providing convenience for corporate internationalization strategies.
02 A Secondary Listing on SGX Also Has Many Advantages
A second listing of shares, also known as a "secondary listing," refers to a company listing the same type of shares on an exchange in another country or region outside its original listing venue. For example, a Chinese company may conduct its first listing on Nasdaq or the New York Stock Exchange in the United States, and then conduct a secondary listing elsewhere, with shares able to flow between the two markets. Well-known Chinese internet giants such as Baidu, NetEase, and JD.com were first listed in the United States and later completed secondary listings in Hong Kong. Chinese companies such as NIO, several companies under Jardine Matheson Group, Comba Telecom, and Helens, known as the "first tavern stock," have also completed secondary listings in Singapore.
Helens, which recently completed a secondary listing, said that completing the secondary listing will help the company enter the Singapore securities market, enhance its position in the Singapore market, increase its global visibility, support international business expansion, and broaden its shareholder base and future funding channels.
1. The Secondary Listing Framework Offers Clear Advantages and Flexible Operation
The advantages of a secondary listing on SGX are clear. It adopts the concept of a "developed jurisdiction," meaning that if a company is first listed in a developed jurisdiction, it can streamline the subsequent multi-market listing process and significantly reduce compliance costs, as it only needs to meet the first listing standards without needing to comply with additional SGX requirements.
For example, if a company has previously listed in the United States and wants to reach more Asian investors, it can pursue a secondary listing on SGX. Singapore operates in the Asian time zone with no time difference, allowing investors to better participate in the company's development and enabling the share price to reflect corporate developments in real time. Similarly, companies listed in Hong Kong can use a secondary listing on SGX to reach a broader base of international investors, especially the growing Southeast Asian investor community, and leverage Singapore's connectivity in international markets to achieve more comprehensive internationalization.
2. Options for Secondary Listing
Secondary listings can be divided into three methods, comprehensively meeting the needs of different companies.
An introduction listing is suitable for companies that do not wish to raise funds at present. For various reasons, a company may feel that the current fundraising environment is not ideal, but it wants to use the convenient policies for secondary listing on SGX to first establish the platform, leverage the status of a Singapore-listed company to strengthen its international brand, and then raise funds later when its share price performance is better.
A full listing requires a complete prospectus, but "introduction listing + placement" targets only institutional investors and certain specified investors, so no prospectus is required at the time of listing. Therefore, if a company wants to raise funds through a secondary listing but does not want complicated documentation, a placement is the simplest method. It does not require approval from the Monetary Authority of Singapore, but is approved by SGX, so the overall timeline is relatively short.
A secondary listing through a public offering should be the most effective option for companies. A public offering can help the company introduce a broader range of investors, allowing more investor participation on the first day of listing on SGX, and liquidity will certainly be higher than under the previous two methods.
Companies completing a secondary listing in Singapore are not treated as second-class citizens. They receive all the benefits and support they should have, and the timeline is also much shorter. As for benefits such as index inclusion and listing subsidies, companies listed on SGX through a secondary listing can receive them as long as they meet the relevant requirements.
03 Medium-Sized Companies Are Advised to List on SGX
Compared with the daily trading value of RMB 1 trillion in China's A-share market, the Singapore stock market has fewer listed companies—only more than 600—so trading volume is also lower, averaging about S$10 billion per day.
Given Singapore's relatively small market size, we encourage companies to list in Singapore only after reaching medium-to-large scale. Smaller companies may become zombie stocks, which is the same problem faced by small-cap companies in other markets. In Singapore, a market capitalization of S$300–500 million is already considered mid-to-large cap, and companies with market capitalizations of S$500 million to S$5 billion are more likely to receive investor coverage in Singapore than in the Hong Kong market. Companies can choose according to their own positioning—whether they want to be a big fish in a small pond or a small fish in the big sea.
If some companies, after listing in Singapore, reach market capitalizations of S$800 million, S$1 billion, or S$2 billion and wish to move to a U.S. listing, we do not hinder this at all; instead, we provide significant support. This can be seen from SGX's open cooperation with the NYSE and Nasdaq.
1. Investor Structure for New Economy Companies on SGX
New economy companies are the type of enterprises Singapore currently seeks to attract, and they receive balanced and favorable treatment. In Mainboard IPOs, from the perspective of cornerstone investors, the proportion of global investors and local investors is roughly equal.
In China's A-share market, the ratio of institutional investors to retail investors may be 20% to 80%, but the Singapore market presents a completely different picture. Institutional investors dominate with a share of up to 80%, while retail investors account for only 20%, which provides greater stability for companies' subsequent larger financing rounds. Sustained financing capability is the greatest and most long-term value a good exchange can bring to companies.
Taking NanoFilm and Aztech as examples, these two new economy companies successfully attracted many strong cornerstone investors, while also bringing together many forward-looking investors willing to accompany the companies' long-term development in private placements. With the continued promotion of various policies, Singapore's investor structure has been continuously optimized, the investment environment is increasingly healthy, and investors are increasingly recognizing Chinese companies.
2. Greater Focus on Institutional Investors
Compared with China, Singapore focuses more on institutional investors. The advantage of institutional investors is that when a company seeks multiple rounds of financing, their participation can ensure that the funding in each round is more solid and reliable, far better than in a retail-dominated market.
Especially after the pandemic, Singapore reopened earlier and its economy recovered rapidly and stably, attracting many large funds to set up bases here and move their investment decision-making teams to Singapore, so as to more effectively connect with global companies in Singapore.
For example, during the pandemic, Chinese companies needing financing often had to communicate with investors face-to-face, and Singapore, having reopened earlier, became an ideal meeting place. At the same time, the uncertainty of the pandemic in Western countries also made Western investors inclined to gather in Singapore. Before this, Singapore already had many strong sovereign funds.
In addition to institutional funds, in the two years after the pandemic, more private banks have also established a presence in Singapore. High-net-worth individuals from different regions are gathering in Singapore, and SGX now manages assets of approximately S$5.4 trillion. Singapore has also implemented various policies, including tax incentives, to encourage family offices established in Singapore to invest the assets they manage into the Singapore securities market.
3. Companies Are Advised to Raise Tens of Millions of SGD at the Early IPO Stage and Then Flexibly Refinance
In terms of financing strategy, SGX offers diversified and flexible solutions. Because it is difficult for companies to raise a very large amount of money at one time during an IPO, SGX often advises companies to raise tens of millions of Singapore dollars in the early stage of the IPO, and then flexibly pursue further financing based on positive secondary market feedback and solid quarterly financial results.
In the capital market, companies may adopt a step-by-step strategy, gradually raising funds through multiple rounds of financing. This also provides an opportunity to deepen interaction with the market and make the market more familiar with the company's development momentum.
In addition, SGX attaches great importance to secondary market liquidity management after listing and encourages major shareholders and founding shareholders to lend out their shares, especially for secondary-listed companies that have not raised funds. This can not only enhance market liquidity but also attract more secondary market participants.
In this process, SGX will provide certain fees to founding shareholders who lend out their shares as a reward for their contribution to liquidity. Especially for entrepreneurs in a lock-up period who cannot directly cash out, this becomes an additional source of income.
04 Detailed Explanation of SGX Listing Requirements
1. The Most Internationalized Exchange
SGX is Asia's third-largest exchange, but its degree of internationalization is the highest in Asia. It is third because Singapore itself is relatively small and does not have many domestic companies. The size of the country and its domestic corporate base limit the breadth of its starting point, so SGX places great importance on attracting global companies.
Among the companies attracted to SGX, nearly one-third come from Greater China, one-third from Southeast Asia, and the remaining one-third are distributed across key regions such as Japan, South Korea, Australia, Europe, and the United States.
SGX also hopes that more Chinese issuers, or more companies with a Chinese background and Chinese culture, will think of Singapore first when taking steps toward internationalization.
2. Industry Distribution of Listed Companies Is Diversified
Overall, SGX welcomes all lawful and compliant companies. In terms of industry preference, SGX focuses on areas favored by investors and has tailored a series of support policies for them.
While recognizing that traditional industries such as industrials, finance, and real estate are the cornerstones of economic stability, SGX has also keenly captured the vigorous vitality of emerging sectors such as consumer, energy, information technology, technological innovation, and healthcare. SGX will focus on increasing pre-listing and post-listing support for emerging industries, providing policy guidance and resource allocation so that these companies continue to receive due market attention and room for development.
3. Current Business Layout of SGX Group
SGX currently has four main operating businesses: equities-cash; equities-derivatives; fixed income, currencies and commodities; and platforms and others. Together they cover the entire exchange value chain and form a diversified and stable revenue base.
Previously, cash equities business accounted for 60%-70% of SGX's overall revenue. In the FY2024 full-year results just announced last week, cash equities business revenue accounted for one-quarter of overall revenue, while overall revenue has grown steadily every year. Singapore not only attracts investors seeking growth opportunities, but is also a preferred destination for risk-hedging strategies. SGX also offers a diversified product portfolio, including products such as the A50 futures, iron ore and rubber futures, Asian currency bonds, green bonds, and ESG products. In the future, SGX will launch more products for market participants, allowing listed companies to benefit further in the process.
4. Companies Are Welcome to Access the Singapore Capital Market in Different Ways
The main ways to list on SGX are as follows:
- Mainboard listing
- Catalist listing
- Direct listing (S shares)
- Backdoor listing
- REIT/Business trust
- SPAC
- Spin-off listing
- Secondary listing
- Dual primary listing
5. Mainboard Listing Requirements
Financial requirements
- At least 3 years of operating history, with pre-tax profit of no less than S$30 million in the most recent financial year; or
- At least 3 years of operating history, profitable in the most recent financial year, and a market capitalization of no less than S$150 million; or
- At least 1 year of operating history, revenue in the most recent financial year, and a market capitalization of no less than S$300 million.
Issue price
- No less than S$0.50 per share.
Independent directors
- Foreign issuers must have at least 2 independent directors who are Singapore residents.
Directors and management
- Must have the experience and expertise necessary to manage the company's business.
Accounting standards
- Comply with the Singapore Financial Reporting Standards (International) (SFRS(I)), International Financial Reporting Standards (IFRS), or U.S. Generally Accepted Accounting Principles (US GAAP).
Conflicts of interest
- The issuer should resolve or eliminate all conflicts of interest before listing.
Laws and regulations
- Obtain all necessary approvals and comply with laws and regulations that have a material impact on its business operations.
Number of shareholders
- If market capitalization is below S$300 million, 25% of issued shares must be held by at least 500 public shareholders; if market capitalization exceeds S$300 million, the shareholding spread requirement is 12-20%.
- For secondary listings, the company must have at least 1,000 shareholders worldwide.
6. Overseas Listing Approval Process After the New Overseas Listing Filing Rules Took Effect
Overall, the entire process from listing preparation to successful listing takes approximately 9–12 months. SGX takes about 2 months from the company's submission of a complete listing application to approval. For Chinese companies that need to simultaneously satisfy the filing requirements of the China Securities Regulatory Commission (CSRC), the CSRC filing and the SGX listing proceed in parallel, and both sides will coordinate their timelines. SGX also strives to provide an application outcome shortly after the CSRC filing is completed. Due to Singapore's neutral position, the CSRC process is relatively more convenient and controllable.
Overall, the Singapore IPO listing cycle from launch to completion is about 9 to 12 months, while a secondary listing can be completed in as little as six months.
7. Catalist: Sponsor Supervisory Regime
Compared with the Mainboard, the listing timeline on Catalist is shorter, and the regulatory approval process in Singapore takes about 6–8 weeks. Catalist adopts a sponsor regime, meaning that from pre-listing to post-listing, the intermediary must provide full support and guidance to the company.
Catalist is mainly for high-growth companies. Founders of such companies focus on corporate development, innovation, and R&D, but listing involves many matters requiring attention. If an intermediary can guide the founder through the entire process step by step, the listing process will be faster and the founder will not need to be overly distracted.
The sponsor will provide hands-on support and guidance to the company before listing and must remain tied to the company after listing. The company must retain the same sponsor from pre-listing through two years after listing. After two years, it may choose to change its sponsor or continue with the same sponsor. Two years after listing on Catalist, if the company meets the Mainboard listing requirements, it may also transfer to the Mainboard.
8. Dual-Class Share Structure
SGX encourages companies to adopt a dual-class share structure, because SGX places great importance on founders' strategic thinking and their understanding of product research and development. Such experience and knowledge are worth preserving. This structure ensures that key individuals have the necessary say in the company's growth, and even if equity is diluted after financing, founders can still maintain a certain degree of control.
The requirements for SGX's dual-class share structure are highly international, and it also allows key individuals or groups to collectively enjoy such rights. Companies considering a Mainboard listing on SGX may consider adopting this share structure to provide strategic continuity for the company.
For further information on Singapore listing and financing and related matters, please contact the professional consultants of the China-Singapore Legal News team.
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Author｜To be confirmed
This article is for informational reference only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.