Published September 2, 2008
Catalist action and reaction
By JAMIE LEE

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ACTION may at last be coming to the more than 100 Catalist companies that need to find sponsors by early 2010 to stay listed, but which have been weighed down by inertia to have done much about it.
The Singapore Exchange said yesterday that in three months' time, all non-sponsored Catalist firms must draw up a timetable that would detail the time spent on the search for a suitable sponsor, the negotiation of terms, expected dates of board approval and sponsor appointment, as well as alternatives that they might undertake, which could include a reverse takeover, M&A or a mainboard transfer.
From Jan 1, 2009, Catalist companies without a sponsor must also hire one when undertaking significant corporate actions that include fund-raising and major acquisitions and disposals.
Amid the weakening market sentiment and rising inflation, costs have continued to weigh on these companies' mind, as sponsorship fees are an outlay, thus explaining why many have stalled in hiring a sponsor. Some companies also appear to be unclear on what the job of a sponsor entails.
Still, with the new disclosure measure, companies that want to stay listed on the Catalist are now forced to examine these concerns and prioritise its plans to hire a sponsor. By prompting companies to disclose their plans to shareholders by the start of the new year, SGX is also rightly promoting transparency as it moves to a disclosure-based regime.
The move also creates a specific window of opportunity for sponsors to woo potential clients, who need to meet the disclosure deadline stipulated by SGX. As companies shop around and scramble to firm up their sponsorship plans, sponsors with attractive pricing models compared with their competitors are likely to clinch some deals over the next few months. SGX also said that this could be one way to push down costs, as sponsors widen their customer base and potentially charge lower fees.
By making it mandatory for Catalist companies to hire a sponsor to take care of fund-raising or acquisition plans starting 2009, SGX has also opened another business opportunity for sponsors who have been hungry for deals in a market that has seen slow take-up, with just 12 sponsored Catalist firms in the market in a span of seven months. This is especially so as active growth companies are likely to raise funds or take on M&A to expand their business.
Despite the concerns over costs, SGX has brought in several sponsors to the market to ensure that prices are competitive and that companies have sufficient time to respond. The ball is now in the companies' court and SGX's new measures signal that, like it or not, this new regime is here to stay and firms can no longer ignore the search for sponsors if they want to remain listed on Catalist.