Growing Trend: More Indian Companies Seek Trust Listings in Singapore

The Wall Street Journal has recently reported the growing trend of Indian companies looking to get listed in Singapore despite the weak currency and economic slowdown in the South Asian powerhouse.

Buoyed by a steady 7% growth rate since 1997, India has emerged as the world’s tenth-largest economy worth $2 billion according to the International Monetary Fund and World Economic Outlook. However, the economic gains in recent years have slowed down due to the global economic downturn and a weaker rupee. Despite the setbacks, many Indian companies have been looking overseas for offshore trust listing havens.

The Wall Street Journal has recently reported that many Indian companies are planning to raise up to $2 billion worth of Singapore trust listings in order to gain more value from their assets. This year saw investors pumping billions of dollars of trust listings into the wealthy city-state. Unlike India, Singapore has established a renowned reputation for its trust listing legal framework.

According to Singapore company registration specialist Rikvin, they expect more companies to make the move as the Indian economy is expected to rebound from its slump with economic growth estimated to hit 6.2% in 2014 brought about by stronger exports, lower inflation, and the government’s commitment to economic reforms. Many companies are looking to expand to Singapore in order to gain more value from their assets.

Why Get Listed?

Establishing trusts in Singapore means that companies will get a bigger capital share as they sell some of these shares to businesses with steady income sources like engineering and construction giant Larson & Toubro, infrastructure development firm IL&FS Engineering & Construction, and UK-listed wind-power producer Mytrah Energy. It is a win-win situation for both investors and Singapore trust-listed Indian firms as the former will be compensated with a guaranteed yield offer for a set period, funded by cash flows.

Expected Growth Markets

Data provider Dealogic reports that Singapore has around 50 business and REITs worth $65 billion in total market capitalisation with trusts accounting for 90% of the total $4.24 billion raised through IPOs. There is a huge Indian market for trust listings as the still-developing sector is expected to fuel economic growth with more investors and entrepreneurs look to Singapore to grow and “internationalise” their businesses.

Future Forecast

Experts have a favourable economic forecast for Indian companies, who are looking to establish trust listings in Singapore. Rivkin's Head of Operations Satish Bakhda expects India’s economic rebound will encourage more companies to play a bigger part in the Asia-Pacific growth markets and position Singapore as a go-to offshore base of operations in the region.

So far, only Indian hospital chain Fortis Healthcare and the Anil Ambani-owned Reliance Communications are listed and both are trading way below their listed prices. Despite the fact that only a few companies are trust-listed, bankers and financial experts have remained optimistic that they will make a breakthrough. Vineet Mishra, head of equity capital markets for Southeast Asia at J.P. Morgan & Chase, believes that “there is still a window this year” to list business trusts in Singapore.