• REITs and BTs Dominate FPO Funding in Singapore for 2017

    REITs and BTs have managed to raise 81% of the total funding on offer through the FPO route on SGX in 2017, thereby dominating it completely.

    BankBazaar Singapore – January 10, 2018

    Singapore: According to a recently released PwC report, the follow-on offers on Singapore Stock Exchange (SGX) in 2017 was dominated by real estate investment trusts (REITs) and business trusts (BTs). To explain the phenomenon better, the company has published a pie-chart that highlights the fact that the REIT and BT together made up 81% of the total funding raised through follow-on public offers (FPOs), last year.

    In another report referenced by Business Times for their news article published on 3 January 2017, PwC has predicted that the domination of REITs and BTs in funding raised through initial public offers (IPO) will continue in the foreseeable future.

    In the report titled Equity Capital Markets Watch – Singapore: 2017 Year in Review, PwC, one of the top four auditors in the world, has predicted some headwinds for SGX in the near future in terms of new listings despite an improved investment climate.

    According to the same Business Times news report, Tham Tuck Seng who leads the Capital Market division of the company in Singapore, believes that there will be an uptick in the number of REIT and BT public listings in 2018. The two sectors had raised 88% of the total funding available in 2017.

    In Singapore Stock Exchange IPOs in the last three years, REITs and BTs have captured 85% of the total funding on offer.

    SGX FPO Funding Sector-Wise Distribution in 2017

    REITs and BTs raised S$2.43 billion in follow-on offers alone last year. This translates into 81% of the total funding raised through the follow-on route. The sector-wise distribution is as follows:

    Sector FPO Funding (in million) Percentage of Total Funding (approximation)
    REITs and BTs S$2434.6 81%
    Transportation S$209.6 7%
    Real Estate Management & Development S$122.2 4%
    Construction & Engineering S$58.1 2%
    Media S$50 2%
    Others S$52.2 2%
    Technology S$33.8 1%
    Education S$28.5 1%

    PwC Verdict

    PwC has said that increase in costs of debt financing, the need to improve balance sheets, and financing needs arising out of acquisition of capital assets, are the main reasons why REITs and BTs are tapping into the equity markets to raise additional funds. It needs to be noted here that 2017 saw a clear pickup in investments and a return of the lost economic momentum. The number of commercial property loans may also have picked up in consequence.

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