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Singapore, Temasek Start $1.1 Billion Fund to Boost Market

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(Bloomberg) -- Singapore is looking to set up a S$1.5 billion ($1.1 billion) fund backed by state investment firm Temasek Holdings Pte. to bolster its stock market, which has struggled with tepid listings and poor trading volumes.

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The fund will invest in high-growth companies and initial public offerings. Separately, the investment arm of the Economic Development Board, a government agency promoting foreign investment in Singapore, will put up to S$500 million into a fund aimed at companies looking to list in two to five years.

“We know that the initiatives we are launching today are no magic bullet. But we believe they will blow new wind into the sails of our public equity market,” Minister for Trade and Industry Gan Kim Yong told reporters on Friday.

The plan, which was reported by Bloomberg on Sept. 14, is meant to increase the city-state’s attractiveness as a location for capital raising for local and regional companies, the government said. Stock exchange operator Singapore Exchange Ltd. is also involved.

“It’s a step in the right direction but the total amount is small for now, and we may need to see more measures for the needle to really move,” said Terence Chua, an analyst at Phillip Securities Research Pte.

Robson Lee, a partner at law firm Gibson, Dunn & Crutcher said the plan could reinvigorate the market.

“The new initiatives are however by no means the panacea to the enervated local market that will instantly canalize a floodgate of unicorns to list in Singapore,” he said.

The country’s bourse has struggled in recent years with tepid listings and low equity trading liquidity. SGX this month announced a framework for listing blank-check companies and signed a partnership with Thailand on depository receipts.

“We are not doing this just for the sake of having high valuations or market cap. It is to give the most promising startups and entrepreneurs from Singapore and across the region another engine of growth,” Gan Kim Yong said.

Here are the main steps announced on Friday:

  • The government and Temasek will set up a new fund that will have a starting tranche of S$1.5 billion to pump into public fundraising and pre-IPO financing of high-growth companies.

  • The Economic Development Board’s investment arm will start a Growth IPO Fund of as much as S$500 million initially to invest in companies that are technology innovators and two or more funding rounds away from listing publicly. The fund will partner with the companies to help them expand, with a view toward an IPO in Singapore.

  • The Monetary Authority of Singapore’s grant to defray companies’ listing costs, initially introduced in 2019, will be increased.

  • SGX will work with companies to provide customized capital market solutions, ranging from private fundraising to enhancing liquidity.

(Updates with quote in 6th and 7th paragraphs.)

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