Taking ‘overly prescriptive approach’ in encouraging startups to list locally may stifle growth: gov’t

The number of Singapore’s IPOs and proceeds raised has been declining since 2021.

The Ministry of Trade and Industry (MTI) said taking an “overly prescriptive approach” to encourage local listing amongst startups may impede their growth plans.

“By making government support to promising start-ups conditional on a local listing, we may end up imposing a rule that may be at odds with the growth plans of the company or the founder,” Minister of State and Minister of Trade and Industry, Alvin Tan, told the Parliament.

Tan also underscored that global investors that are in Singapore will ultimately determine how to allocate their capital based on their strategies and how they view the market. 

“If we prescribe that they must invest certain amounts in only locally listed companies, we will effectively constrain their investment mandates and end up losing a larger pool of investors that adopt a regional or global view,” Tan said.

The trade minister also explained that companies considering public listing have “several commercial objectives in mind.”

“First, they may decide to list in jurisdictions where they can secure the best valuations for their shareholders. For quite several companies, a US listing is attractive due to the US’ deeper pool of investors and liquidity,” Tan said.

“Second, companies may list in jurisdictions that give them better exposure to key target markets. For example, a company planning to expand its business in China may choose to list in either Hong Kong or China, or both,” he added.