Tough fundraising landscape looms over listed firms as SGX weakness intensifies

Alternative funding is the way to go.

Listed firms will have a difficult time wheedling money from institutional and retail investors this year. According to a report by Voyage Research and the Small and Middle Capitalisation Companies Association (SMCCA), the SGX’s lacklustre outlook will cause fund raising challenges for firms already listed on the local bourse.

The report stated that there will be increased competition for conventional funding methods such as IPOs, secondary placements, and rights and warrants issues as the SGX seeks to increase the number of listed firms without improving trade activities.

“Listed companies who need to raise funds through these conventional means are likely to face more challenges. investor capital is also expected to be more selective, making it more of a investor’s market than an investee’s market,” the report stated.

Here’s more from the report:
Listed Companies will still require capital for growth opportunities. Given increased competition for conventional equity funding methods and decreasing equity investor interest,  the door will naturally open to alternative funding methods.

These trend is not new given the number of Listed Companies that have established Medium Term Notes programmes. There are also more Listed Companies who have agreed to hybrid debt and equity structures which are generally referred to as Convertible Bonds.

More Listed Companies are thus expected to take up these alternative funding methods. This will also be driven by increased familiarity and acceptance of such alternative funding methods.