The Hindu Business Line : Singapore SE launches Catalist for SMEs

Singapore, Nov. 27 Singapore Stock Exchange (SGX) on Monday announced the launch of ‘Catalist’, a “sponsor-supervised” listing platform that will be Asia’s answer to the Alternative Investment Market (AIM) of London Stock Exchange. ‘Catalist’ has been created through the transformation of SGX’s existing second platform SESDAQ, on which 159 small and medium enterprises are currently listed.

“Having seen the movement of many Asian companies to AIM in London, we feel it is time to respond,” said Mr Hseih Fu Hua, CEO of CGX, at a news conference on Monday. The new platform has been two years in the making. London-based AIM was launched as an international platform for smaller companies to issue shares with the help of what it calls “a pragmatic and appropriate approach to regulation.” According to its Web site, over 2,800 companies have joined it since its launch in 1995. (The main market SGX has 700 companies listed on it). Although AIM has been accused of lowering standards, an LSE report of 2006 on AIM showed that it had outperformed the wider market since 2000, and that its failure rate was less than three per cent in the last four years, said Mr Hseih.

Like AIM, SGX’s new listing platform, Catalist, too will have more flexible regulations, scheduled to come into force from December 17. Companies seeking to list need not meet any prescribed financial entry criteria; nor is there any restriction on the size of the company. But key safeguards and a stringent selection of sponsors will maintain the quality of the market, said SGX officials.

Sponsors remain key in this system. SGX will not review the admission of companies. It will be the sponsors who will determine the suitability of companies for listing, advising and guiding the companies through the listing process. SGX will not review the admission of the company. SGX will maintain a pool of “quality sponsors” but will continually seek to invite local and overseas sponsors to the new platform, said Mr Hseih. This fits in with the larger objective at SGX, to have a more demand-led market, than a supply-led one, said officials. Private companies being more “nimble”, can access companies from all across the world, and with their help the exchange can get companies in much larger numbers, said Mr Hseih.

However, Real Estate Investment Trusts and Business Trusts are barred from listing on this New Board.

Companies can only list through a sponsor of which two categories have been provided for — Full Sponsors who brings a company to list and will remain the company’s sponsor for at least three years, and Continuing Sponsors. All companies must retain a sponsor at all times. Full sponsors need lead issue manager experience and a base capital of Singapore $5 lakh. Continuing sponsors need experience in corporate finance or compliance advisory and a base capital of Singapore $2.5 lakh.

Sponsors may own no more than 10 per cent equity stake in a company they are sponsoring. Sponsors are, however, accountable both to the exchange and to the law, and have to maintain their independence. That their market reputation will be at stake will also keep them in check. The sponsor has to proactively alert SGX if he knows that matters are amiss.

With this system the time to market from the time of applying for listing will get crunched to five-six weeks from the current 12-17 weeks, said officials. “We expect trading to be more active in Asia,” said Mr Hseih, comparing the new market’s appeal with that of AIM. The platform will be open to all international companies but it would be of particular appeal to Asian companies, he said. Enterprises from the growth economies of Asia would find it more convenient to be in an Asian market, he said. Additionally, he said, time-zone wise, market players would like to be closer to news of company activities. He said the stage was too early to tell how many sponsors and companies would join or list on the Catalist. Out of the roughly 1,700 traded stocks on AIM, 100 are Asian companies, said officials.

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