Singapore joins dual-class shares club, wooing tech IPOs

By BLOOMBERG

SINGAPORE • Singapore Exchange Ltd (SGX) said it allow companies with dual-class share structures to list, a month after Hong Kong announced a similar proposal, as competition between markets for technology listings becomes increasingly fierce.

SGX will consult on the rules this quarter and expects the first listing “soon after”, CEO Loh Boon Chye said last Friday at the company’s quarterly earnings briefing.

The moves by the two Asian exchanges come as some of the world’s largest technology companies from Alibaba Group Holding Ltd to Facebook Inc use stock with enhanced voting power to protect the influence of their founders and management.

Such structures have faced opposition from investors, who fear their rights could be eroded amid corporate governance concerns.

SGX shares rose 4.6% yesterday to close at S$8.35 (RM24.92), the biggest gain since July 2009 and their highest level since July 2015, according to data compiled by Bloomberg. Analysts including Nick Lord of Morgan Stanley and RHB Bank Bhd’s Leng Seng Choon wrote in research reports that the stock would probably gain as revenue increases.

The Monetary Authority of Singapore said last Friday it supported SGX’s decision to allow dual-class share structures, and that it would review the safeguards the exchange will propose to mitigate the risks involved.

Hong Kong Exchanges & Clearing Ltd proposed allowing innovative companies to list with dual-class shares as part of a package of measures released last month. Its plan would see each multiple-vote share represent no more than 10 times the votes of ordinary shares, and only companies with a focus on new technologies would be eligible. Founders and executives would need to demonstrate how their contribution merits the structure.

SGX also said that it would go ahead with the introduction of stock futures on some of India’s largest companies on Feb 5.

The National Stock Exchange of India Ltd was asking the Singapore bourse to delay the start, Bloomberg reported last week. The exchange operator is also planning a medium-term note programme to raise as much as S$2 billion in debt to fund its growth.

“The company’s plan to launch the Indian single-stock futures and dual-class share scheme are positives,” Leng of RHB wrote yesterday. RHB recommends investors buy SGX shares and has a target price of S$9.

New products and cuts, including to operating expenses, may not be enough to lift SGX’s profit, Bloomberg Intelligence senior industry analyst Sharnie Wong wrote in a note yesterday.