More can be done to make it more attractive for high-growth tech firms to list on the Singapore bourse, including educating retail investors about such companies, said Singapore Venture Capital and Private Equity Association (SVCA) chairman Jeffrey Chi.
He said the Singapore Exchange’s plans to become the first Asian bourse to allow dual class share listings is a step in the right direction but more can still be done.
Dr Chi was speaking at the launch of the Southeast Asia Private Equity Report on Friday (Apr 21). The report, released annually by management consultancy Bain & Company and SVCA, tracks private equity and venture capital deal flow in the region
It showed private equity investments in South-east Asia soared to US$6.8 billion (S$9.5 billion) last year. This was up from US$4.8 billion a year earlier and 14 per cent higher than the average deal value from 2011 to 2015.
This robust growth is expected to continue this year, but experts flagged longer-term challenges in South-east Asia’s capital markets – such as companies’ reluctance to launch initial public offerings on regional bourses.
“The institutional investor base understands investing in high-growth tech companies which might not be profitable yet,” said Mr Suvir Varma, who leads Bain’s private equity practice in Asia-Pacific.
“But many South-east Asian (public) markets are heavily retail investor-oriented. The average retail investor might not understand the concept of strong revenue growth but continuous negative earnings.
“Retail investors in the region are cash oriented, they want dividends and returns.”
Dr Chi, who is also the managing director of venture capital firm Vickers Venture Partners, said: “Will our own unicorns necessarily decide to list in Singapore? It’s a big risk for a company to list on an exchange without a track record.
“Also, is the investor base open to it? That’s a longer term issue which involves education.”