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Singapore Exchange Says IPO Pipeline Will 'Step Up'

Roshan Vaswani, Supervising Producer, CNBC
Tuesday, 16 Apr 2013 | 11:51 PM ET
SGX: Cautious Despite Best Quarter in 5 Years
Tuesday, 16 Apr 2013 | 7:20 PM ET
Muthukrishnan Ramaswami, President of the Singapore Exchange says securities and derivatives trading lifted Q3 earnings and he sees room for improvement in the bourse's primary activity. He sounds a cautious note on guidance.

The Singapore Exchange, or SGX, is confident the number of companies looking to go public will increase this year because there now appears to be a match between what issuers are expecting and what investors are willing to pay, SGX President Muthukrishnan Ramaswami said.

Last year nearly $5 billion worth of initial public offerings, or IPOs, were pulled from Singapore because of soft demand and market volatility.

But Ramaswami expects activity to pick up this year because most of the companies that went public on the SGX over the past six months are now trading above their issue price.

"We're seeing a period where IPOs can sustain their initial offer price, so that's a good omen," he told CNBC Asia's "Squawk Box" on Wednesday.

(Read More: Asia's IPO Market Just Got Its Buzz Back)

He added that his optimism stems from the fact that issuers and investors appear to be on the same page and that is likely to translate into more companies going public.

"Now that we're seeing traction where there is a matching of prices and sustainability of prices we're optimistic IPOs will step up," he said.

The Singapore Exchange reported its largest quarterly profit since the 2008 financial crisis on Tuesday as a surge in trading volumes pushed its earnings up 26 percent, according to Reuters.

Net profit was S$97.7 million ($79.0 million) in the January to March quarter, well above the S$77.8 million earned a year earlier.

REITs Do Well

Mapletree Greater China Commercial Trust was the last major IPO on the Singapore Exchange. It rose 10 percent above its issue price on its debut in March. The property trust's $1.3 billion issue was heavily oversubscribed and was Singapore's biggest REIT listing on record. Based on its IPO price, the trust is expected to yield 5.6 percent for the year ending March 2014.

Ramaswami said that real estate investment trusts, or REITS, like Mapletree Greater China Commercial Trust, had seen a lot of investor interest.

"REITS have been good for us, they've been a good yield play, there is a lot of appetite for REITS and we do believe that it is a sustainable asset class," he said.

He added that he expects to see more REITS list on the SGX later this year.

(Read More: Blank Check IPOs Bring Hope and Caution to Malaysia)

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