Source – www.marketscreener.com
Online used car marketplace Carro is gearing up to raise approximately S$130 million (US$98 million) as it prepares for its upcoming stock market debut. Despite being headquartered in Singapore, Carro is considering a listing on either the New York Stock Exchange (NYSE) or Nasdaq, rather than the Singapore Exchange (SGX). The company had already secured S$75 million from HSBC two months ago, according to CEO and co-founder Aaron Tan.
US Markets Offer Greater Depth and Valuation Potential
Carro’s decision to potentially list in the United States is driven by the depth of the American market and the opportunity for better valuation. “The US market has a lot of depth, with no shortage of potential investors,” Mr. Tan explained. He emphasized that the longstanding nature of US financial markets, particularly for tech companies, makes them more attractive for achieving higher valuations. In contrast, listing on exchanges like SGX, the Tokyo Stock Exchange, or the Stock Exchange of Thailand could result in lower valuations due to a lack of familiarity with tech companies.
Concerns for SGX as Firms Look Elsewhere
Carro’s consideration of US exchanges over SGX highlights a growing concern for the Singapore bourse, which has seen a decline in the number of companies choosing to list locally. In the first half of this year, only one initial public offering (IPO) occurred on SGX, compared to six in 2023. Meanwhile, five Singapore-based companies, including Haidilao and Ryde, opted to list overseas. Despite the challenges, Carro has not completely ruled out the possibility of listing on SGX, though Mr. Tan noted that doing so in the US would entail higher costs related to audits and compliance.
Strengthening SGX’s Appeal
Efforts are underway to bolster the attractiveness of SGX. The Monetary Authority of Singapore is setting up a review group to enhance the development of the exchange. SGX also introduced a Special Purpose Acquisition Companies (SPAC) listing framework in September 2021, which saw limited success with only one SPAC completing a merger. Tay Hwee Ling, an expert from Deloitte Southeast Asia, suggested that encouraging international firms to consider SGX for primary or secondary listings could help improve the situation. She stressed the need for a concerted effort across the business ecosystem to strengthen the overall IPO market in Singapore, increasing both the number of IPO investors and the quality of companies choosing to list locally.
