Q&A: Singapore Exchange's Mohamed Nasser Ismail

Q: What do you see as SGX’s role in supporting Singapore’s start-up ecosystem?

A: We see our role in as galvanizing the various stakeholders that can support the growth of start-ups and SMEs [small and medium-sized enterprises], and helping them develop their own capabilities and have access to a wider range of funding options. Often it is about connecting the dots and helping them with specific issues. We have partners with different mandates, but at the end of the day everybody has a similar overarching objective, which is to help start-ups and other SMEs succeed.

Q: What other forms of assistance can SGX provide to start-ups and SMEs?

A: I think what SGX does well is to help understand how the capital markets work and who the players are. These stakeholders can provide advice to SMEs and start-ups that might not otherwise know how to navigate this space. We have brought in very credible partners, such as legal advisors, bankers and auditors, who can help start-ups grow and improve their chances of success.

Q: Why is this support necessary?

A: In Singapore today, various government agencies have been very active in supporting start-ups, in terms of mentoring them and providing a chance for them to develop their business ideas and products. But at some point, usually around the Series B stage, there is a gap between government-related financing and private markets fundraising. It can be quite challenging for start-ups because they can ill afford to devote time and resources to looking for funding; they really should be developing their businesses. Having these partnerships enables us to connect these companies with the investor community in a more orderly fashion.

Q: SGX recently partnered with Infocomm Media Development Authority (IMDA) to help technology start-ups list in Singapore. Why do you expect these companies to be interested in going public?

A: The companies that come onto national exchanges typically reflect the economy of their jurisdiction. In the past, SGX’s stronghold sectors have been marine and offshore real estate, consumer, technology and healthcare, with the importance of each varying over time. Now, as the Singapore economy goes through a structural shift toward new economy businesses, it is only to be expected that some of these companies, including disruptive tech companies, will come to our capital markets.

Q: What is SGX’s interest in seeing more tech start-ups go public in the territory and what steps has it taken to facilitate their progress?

A: Our efforts are not just because we want technology companies to list, but because there is going to be a natural demand for such companies from investors and a natural need for such companies for access to capital. For these companies we have a growth board called Catalist. In terms of the indicators that are important to companies and investors – valuation, liquidity, and access to capital – we believe that the Catalist value proposition is superior to almost all other growth boards. Most importantly, Catalist is very successful in providing access to capital, not only on day one but also day two. For every $1 billion raised at IPO we’ve managed to raise $3 billion for companies after the IPO. This is why we are seeing a vibrancy about our capital board; I think more and more SMEs are coming to understand the value of having a listing and a potential war chest, to take advantage of acquisition opportunities and inorganic growth.

Q: Why is it important for a stock exchange to take such an active role in supporting the start-up ecosystem?

A: The way that capital is allocated globally has changed: companies are staying private longer, and are not listing or staying listed as much as before. Exchanges need to adapt too, and one way is by supporting an organized facility that can help companies remain private and still have access to capital. Another way is to be more active in terms of cultivating these companies, so that as they grow they have paid attention to governance, financial reporting standards and risk management, and can withstand such complexities in their business operations. That’s where listing standards matter. We’re trying to transfer some of our standards to private companies, so that when the time comes they will be ready to be a public enterprise. They will also be more familiar with the SGX ecosystem, making the transition smoother.

Q: How do you expect investors to react as more tech firms enter the public market?

A: I think the strong recent performance of the Catalist board reflects the demands and needs of the marketplace. But more importantly I think it also reflects the changing appetite of the investor base. Traditionally, investors in public markets tend to be more comfortable in sectors they are familiar with. But increasingly a lot of these investors who are also corporates understand that the technological revolution is changing the way the world works, and a lot of their investments and businesses are being disrupted by technology companies. The best way to understand this disruption is to invest in it, so there’s increasing appetite for companies in the new economy. 

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• Topics
• Southeast Asia
• Regulation
• Investments
• Singapore