Singapore’s plans to become the first Asian bourse to allow dual class share listings is catching the attention of tech entrepreneurs and could help turn a staid market into a buzzing tech hub, as the city-state looks to rebrand its image. Singapore Exchange’s boldest move in years is designed to make it the go-to-place for potential IPOs for Southeast Asian start-ups, such as ride-hailing services Grab and GO-JEK, and online retailers Tokopedia and India’s Flipkart. Such a change, if approved, would support the Southeast Asian financial hub, which is battling the impact of cooling global trade, a downturn in its key offshore support services sector, and a spate of delistings. Singapore could by the end of this year implement a split share system that allows entrepreneurs to retain control even with minority stakes, by giving some shares more weight.
“It’s a game changer,” said Vinnie Lauria, a founding partner at Golden Gate Ventures, a Southeast Asian venture capital firm which has invested in over 30 companies across more than seven Asian countries. “These companies want to have the voting power and the controlling shares within a small group of people who have been really involved since the beginning.”
Dual class share listings (DCS) are allowed on the New York Stock Exchange and Nasdaq. It gives extra voting power to protect executives from shareholders obsessed with short-term gains. The structure has been embraced by companies such as Facebook, LinkedIn, and high-valued tech startups known as unicorns. Bankers and lawyers say the changes would put Singapore on the Asian tech industry’s short-list, especially given that local exchanges typically offer richer valuations to regional firms when compared to U.S. exchanges.
The share structure got attention in Singapore in 2012 when Manchester United jilted the city state over efforts by the Glazer family to retain control through an IPO using this system. In Asia, such share structures are almost unheard of, although technically possible in particular cases in Tokyo and Sydney. The Hong Kong bourse proposed weighted voting rights in 2015 but failed to get regulatory support. SGX, a global center for business trusts and real estate investment trusts, is seeing an opportunity to fill the void and broaden its appeal to tech and other new economy companies. This chimes in with the city-state’s moves to provide funding and light-touch regulation, as it seeks to reinvent itself as a fintech and disruption hub.
A key Singapore advisory panel last month recommended the new share system with appropriate safeguards to widen public financing options. SGX is closing in on a public consultation that is open till mid-April. Based on feedback, it will then launch a second consultation.