How SEA companies can list their IPO on the New York Stock Exchange

How SEA companies can list their IPO on the New

A few years ago, Shopee’s parent company, Sea Group, was one of the first SEA companies to be listed on the New York Stock Exchange (NYSE). Recently, TDCX, a Singaporean digital customer experience (CX) provider, announced that it is also on the NYSE.

Closer to home, MoneyLion’s Foong Chee Mun became the first Malaysian fintech founder to get an IPO on the NYSE. There have also been headlines around Grab, PropertyGuru, and similar tech giants heading towards the same goal.

These successes have raised questions from the SEA Soonicorns (soon to be unicorns) who are also striving for similar progress. In a Wild Digital SEA 2021 panel, Laurent Junique, founder and CEO of TDCX, shared his thoughts on how he knew his startup was ready to go public.

He was joined by Andy Tai, Managing Director of Goldman Sachs, and Delano Musafer, Head of NYSE Capital Markets in APAC, the team that helped TDCX get listed.

Moderated by Kit Wong, CFO of Catcha Group, the discussion highlighted the credentials required of SEA startups to get their IPO. The panelists also explored the areas of consideration that companies should take into account before doing so.

But what’s so great about the NYSE?

The NYSE is known to be one of the “gold standards” that businesses around the world can register with. Besides the prestige it holds, companies that get their IPO there would have better investment opportunities and higher liquidity, according to Delano.

In addition, the NYSE is also unique in that it has human market makers on the ground who are responsible for managing the stocks of a few companies. They even have to commit their own capital to back the stocks of their companies, so that investors and issuers have more confidence in their stocks.

This provides an incentive for market makers to ensure that the companies entrusted to them are doing well.

Kit added his two cents: “For what it’s worth, Catcha Group is also listed on the New York Stock Exchange and in part because of the human element of market making, having someone to talk to makes a big difference. difference.”

How to know your business is ready to be listed

Become a unicorn

Laurent kicked off the discussion with his experience on how he knew TDCX was ready for its IPO. After growing from 13,000 to 14,000 employees in 26 years, TDCX has moved from providing its Customer Experience (CX) solutions to clients only in Singapore to those in SEA.

Soon after, the team realized TDCX’s potential to conquer the global market as well, which led to Laurent’s decision to bring TDCX to the public market.

Andy made his case from a market capitalization perspective, stating that the rule of thumb for a company to know it is ready to go public is to achieve unicorn status first. Having a market capitalization of at least US $ 1 billion is helpful because it shows that a company is of a size that investors would be interested in.

“At this point, you’re too big for investors not to look at you,” Andy said.

Delano agreed, but revealed that NYSE listing standards only require a minimum market cap of US $ 200 million to receive an IPO, but getting unicorn status is advantageous.

Know your suitability for the market

While IPOs are generally agnostic about the types of companies that are listed, Andy stressed the importance for companies to know all of their addressable markets and plan for growth from there. But first, a business needs to take a step back to examine what its business is all about and find out how it can serve the market, nationally or internationally.

To illustrate his point, he highlighted the success of the Indonesian marketplace, Bukalapak, which was listed on the Indonesian stock exchange. He said the company has a very good understanding of its local market, as evidenced by its branding and internal systems.

Laurent brought his experience to the field. When choosing the exchange on which TDCX was to be listed, they were advised to research which markets had the most peers in their industry and find them in the United States.

However, having more industry peers meant higher competition, which meant TDCX had to differentiate its history and offerings in order to stand out.

“Because we came from SEA, a high growth region, we had a unique proposition for investors. Now, we didn’t just choose the United States, we chose the NYSE because we think it’s important to have an exchange focused on supporting entrepreneurship, which was spectacular there ” , Laurent said.

TDCX was also told that the NYSE was a market that also had more liquidity and that getting an IPO would give the company access to global investors.

“To put the number down, the NYSE trades around $ 150 billion US every day, so that’s a huge pool of liquidity,” Delano added.

Have a solid business trajectory after the IPO

Panelists stressed that companies looking to go public must also establish their business trajectories. This includes the company’s future plans for fundraising related to the stock market liquidity perspective.

Laurent could relate to this and recalled that TDCX actually postponed enrollment when the pandemic hit in 2020. This was because the team did not have enough visibility into the future of how the ‘business would operate throughout the pandemic or into the new normal.

“We wanted to be in a better position to explain our story to investors. We didn’t want to be in a position where we didn’t know what to do, ”he said.

“You want to be confident and able to project where the business is heading in the coming quarters. You want to be the best you can be.

Prepare to go public

Put your papers in order

In Andy’s experience, companies generally underestimate the amount of effort and time it takes for a company to go public. He further explained that initiating the registration process involves hiring bankers, accountants and lawyers to begin the audit and filing of necessary documents.

This process typically takes 6-8 months before anything else can happen, such as marketing the business to investors.

Andy advised companies looking to build a list to start thinking ahead and tidying up documents like financial statements and other documents before they even hire the necessary professionals.

“Keep in mind the auditing standards you will be subject to, as the US and national stock exchanges have very different accounting standards,” he added.

Prepare your team

Another thing that a company has to deal with besides paperwork is its internal corporate governance. The team must be mature enough and aware of the extra work beyond their daily work.

There is a lot of work and commitment, not only for the IPO, but for the future as a public company, Laurent said.

Be prepared for public review

Laurent shared that a major difference between being a publicly traded company and a private company is the increased public scrutiny it is now undergoing. As the company will now have to report on its financial performance and projections on a quarterly basis, there will be an increase in administrative tasks, reporting on results, etc.

I see it from a perspective of becoming an adult and it’s a good effort for a business to be more structured, more organized and more transparent to pave the way for future growth. It also reminds us that the IPO isn’t the end of the journey, it’s the start.

Laurent Junique, founder and CEO of TDCX

If you’re not ready for the amount of work, don’t force an IPO unnecessarily

This was according to the speakers, who said there isn’t exactly a “bad time” to go public per se. However, bad results can occur if a company and its team are not mature enough or ready to endure the efforts required to be publicly traded.

Some of these examples can range from a listed company missing an earnings report, or not achieving the intended results, and remaining stagnant.

It certainly shows that companies wishing to go public need to have a very good understanding of their business, how it fits in the market, backed by a strong and united team.

“That’s why I stress that companies should think about preparing for an IPO much earlier, as these key areas take a long time to develop,” Andy concluded.

  • You can read more about Wild Digital here.
  • You can read more about what we wrote about Wild Digital SEA here.

Featured image credit: Laurent Junique, Founder and CEO of TDCX / Delano Musafer, Head of APAC Capital Markets at NYSE / Andy Tai, Managing Director of Goldman Sachs

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