Singapore bourse mulls easing dual-class listings rules to attract tech IPOs

The SGX Centre at Shenton Way. Credit: DEALSTREETASIA

Singapore Exchange Ltd. is stepping up efforts to bring technology companies to its market.

The bourse last year proposed allowing dual-class shares, a structure favored by tech founders because it lets them keep control after going public. Now SGX wants to loosen some of the restrictions it planned to impose on dual-class listings, such as a minimum market cap, according to people with knowledge of the deliberations who asked not to be named.

Making dual-class shares easier to adopt is an attempt to make Singapore more competitive with exchanges in the U.S., which have in recent years listed Chinese tech companies that now have a combined market value of about $785 billion, according to data compiled by Bloomberg. China is also joining the race to draw more tech initial public offerings, while Hong Kong is pitching that it too will allow dual-class shares.

SGX’s latest proposals, which are expected to be published as a public consultation this month, would eliminate an earlier recommendation that dual-share listings have a market value of at least S$500 million ($380 million), the people said. A proposed rule that such companies have to be traded on the main venue will also be dropped, they said. The initial consultation was published in February 2017, and the rules have yet to take effect.

“We are currently finalizing our responses to the feedback received in the first consultation, which has been supportive of dual-class share listings,” SGX said in an emailed response to queries. The second consultation “is expected soon and will reflect market views.”

The city-state’s exchange also plans to relax a so-called sunset clause that would automatically convert a dual-class structure into a traditional one share, one vote structure after a certain time, the people said.

SGX officials believe they can ease rules and let market forces determine if and when companies should adopt structures with unequal voting rights, the people said. The exchange said in its earlier consultation that some believed imposing extra listing conditions could make Singapore an unattractive venue.

Nearly one in five companies that went public in the U.S. last year had dual-class shares, according to the Council of Institutional Investors, whose members include large pension funds. That included Snap Inc. and billionaire Patrick Drahi’s Altice USA Inc, 2017’s two largest American IPOs.

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