Share sales sulk in Q1 as IPOs stay home

Singapore

IF Singapore's initial public offering market were any quieter, it would be a mime in hiding.

Investment bankers hope it is merely an awkward pause.

Equity capital raised on the Singapore Exchange fell 76 per cent year-on-year in the first quarter of 2015 as the initial public offering (IPO) market dried up, according to preliminary data from Thomson Reuters.

Proceeds from stock sales fell to US$175.6 million, the lowest January-to-March performance since 2003, when only US$104.5 million was raised.

All of the proceeds so far this year have been from follow-on issues; there were no IPOs, the first empty quarter for new listings since data was available in 2000.

Issues from the consumer staples sector dominated the slow quarter, with US$99.9 million, or 56.9 per cent of the total raised, coming from the sector.

Singapore-domiciled companies in general were not very active either when it came to selling equity.

Total equity proceeds from Singapore-based companies, whether raised in Singapore or overseas, fell 81 per cent to US$146.6 million in the first quarter.

Thomson Reuters estimated that only US$3.6 million in fees were collected by equity capital market bankers from Singapore-domiciled companies' deals during that period.

"Obviously this quarter is really very bad," said Tay Toh Sin, head of corporate finance at OCBC. "The overall market is also bad, but the bright spot is we're seeing more regional deals coming in."

An appreciating Singapore dollar against regional currencies has actually raised the appeal of raising money in Singapore, Ms Tay said.

But volatility in global exchange rates and commodity prices have kept deals on the sidelines, such that bankers see healthy pipelines clogged at the last valve. Stability should help the flow to return.

"Low currencies are OK, but people need for it to normalise first," Ms Tay said. "It's the same for oil prices. People need to know where's the bottom."