Singapore Exchange chief eyes Asia IPOs

One of the first things that strikes a visitor to Magnus Böcker’s office – aside from the neat piles of papers and a bulky company prospectus on his desk – is a wooden toy battleship on display at the back.

It was a gift from a banker in the 1990s to mark the takeover by OM Gruppen, the Nordic exchange operator where Mr Böcker was a senior executive at the time, of the Swedish stock exchange.

Mr Böcker, a 50-year old Swede, has just had his contract renewed for another three years a world away in Asia, as chief executive of the Singapore Exchange. But while he says the battleship represented “my first trophy in exchange mergers”, he hints there may be no more.

The failure last year of his attempt to combine SGX with Australia’s exchange has led to a focus on organic growth – embodied by last week’s announcement that SGX is tightening listings standards to attract bigger initial public offerings.

Asked if any mergers or acquisition are possible Mr Böcker says: “No, it’s not really on my agenda.”

It is not hard to see why. While the exchange has built up a diversified business in equities, derivatives and clearing, Mr Böcker concedes the exchange lacks large enough company listings to give investors a reason to trade the Singapore index.

“We have too few big market cap companies. That’s a prerequisite for us to being attractive when you look at indices, and for building up liquidity and velocity in our stocks,” Mr Böcker says.

Singapore also has been battling perceptions that its listings regime is lax, not helped by probes by into corporate governance at four of the 142 Chinese companies – so-called “S-chips” – listed on the bourse.

“I think that we’ve [Singapore] had our issues, no doubt, but if we compare to the US or Hong Kong they’ve had more issues,” Mr Böcker says.

He flatly rejects any notion that Singapore has used looser regulations to attract business: “I’d like to say once and for all that is not true. I need to debunk that myth.”

Mr Böcker argues exchanges need higher listings standards for investors to trust the companies listed on them. “It’s the only long term, viable way to work,” he says.

The ultimate goal is to grab a share of projected growth in Asian IPOs – more listings like IHH Healthcare, a Malaysian hospital operator whose prospectus is on Mr Böcker’s desk. The company’s shares are due to start trading this week in the first concurrent float on the Singapore and Kuala Lumpur exchanges.

Mr Böcker anticipates there will be 2,000 IPOs annually in Asia by 2020, representing three-fifths of the global total. That is up from about 1,100 last year, or two-fifths of the global number.

Although he failed with a big-ticket acquisition at SGX, he does not rule out closer ties on products and services with other exchanges such as the London Stock Exchange.

This month the UK and Singapore bourses confirmed they would offer trading in each other’s blue-chips. “I think there are a lot of opportunities to work with other exchanges, including the LSE,” Mr Böcker says, adding that the UK exchanges’ clearing house, LCH.Clearnet, is “a natural partner”.

Meanwhile, his rival to the north, Hong Kong Exchanges & Clearing, may be poised to strike big with a £1.38bn acquisition of the London Metal Exchange. But Mr Böcker argues that this could have a beneficial spillover effect to Singapore, another big commodities market.

“From our perspective it is more positive than the status quo,” he says.