News Stop: 20 April 2006

Some quick news for the day with businesses and startups.

SME exchange to launch with 1 firm, dated 20 April 2006, Today Online.

“Singapore’s long-awaited private equity exchange will kick off this quarter with one company trading, said Mr Loh Hoon Sun, managing director of Phillip Securities licensed to run the fundraising platform for unlisted local firms.
“As long as one company is ready, we’ll start and build from there,” he said yesterday at a talk organised by the Singapore Venture Capital & Private Equity Association….

A private equity exchange was mooted in 2002 by a sub-panel of the Economic Review Committee, as a financing source for small firms which, despite having good growth prospects, face difficulties getting bank loans.

The idea moved closer to realisation when Parliament amended the Securities & Futures Act (SFA) last January, allowing a company to raise up to $5 million from investors without needing a prospectus, which is a legal document containing information on a share offer as well as a company’s historical financial statements…..

But the absence of a prospectus also entails more risk for the investor. That is why the SFA states that those who buy OTC shares have to be “pre-qualified”, meaning the individual or corporate investor must first fill in two sets of forms to analyse his risk profile and to determine that he is fully aware of the risks of buying into OTC shares.

“All things being equal, Singapore companies would rather do it (list) here,” he said. “

Okay, it’s happening now. Of course, I will warn those of my friends who keep asking me how to speculate not to go into this exchange. But in any case, for the startups, raising funds will be simpler with an stock exchange facilitated for SMEs. The cardinal rule still applies: Raise money if you need to grow the company and not for the sake of vanity exercise, for example IPO.

Technorati Tags: Entrepreneurship, Singapore Entrepreneurs, SME, SGX, Private Equity, Phillip Securities