SINGAPORE — Going public is expected to the be the main exit
road for most start-ups in the near term as corporations are likely to put
their merger and acquisition plans on hold due to the coronavirus pandemic,
according to the CEO of Vertex Holdings.
Vertex is the venture capital arm of Singapore state
investor Temasek Holdings and has more than $3 billion in assets under
management as well as over 200 active portfolio companies. It has six network
funds that invest in early-stage tech start-ups, health care start-ups and
growth-stage companies spanning across places like the U.S., China, Israel,
Southeast Asia and India.
“I think the IPO market is still going to continue to be
strong based on what we can see so far. I think U.S. market will remain strong
for the short term and then also for China market, continue to be very strong
IPO market,” Chua Kee Lock said on CNBC’s “Squawk Box Asia” on Monday.
Vertex has two companies that are planning to go public next
year, one in the U.S. and the other in China, according to Chua. The firm has
backed some prominent names including Southeast Asia’s ride hailing giant Grab.
Initial public offerings will be “the key exit road for most
start-up companies,” Chua said, adding, “But at the same time, when things do
recover, perhaps second half of next year, we’ll see some larger companies
looking for opportunities and they will start beginning to acquire companies in
this region and even in other parts of the world.”
A sizeable number of companies have already gone public this
year despite global economic uncertainties surrounding the coronavirus pandemic
— particularly in the technology sector in both the U.S. and China. And more
are lining up for their debut, including Airbnb and DoorDash. This year’s most
anticipated initial public offering was set to take centerstage in Hong Kong
and Shanghai where Alibaba-affiliate Ant Group, which operates the massive
Alipay system, was set to go public before the record-setting listing was
suspended.
Tech ‘bifurcation’
The trade war and growing technology rivalry between the
United States and China remain on the radar for investors and companies alike.
Though U.S. companies are optimistic about doing business in the world’s second-largest
economy following President-elect Joe Biden’s victory this month, experts have
said the tension between the countries is unlikely to go away under a Biden
administration.
Vertex’s Chua said he expects trade tensions to linger for
the foreseeable future even under Biden. China will view the U.S. as an
unreliable supplier and therefore would push for the development of domestic
companies and industries, he explained. The U.S. would, in turn, continue to
see China as a threat and would work to keep critical technologies from getting
into the country, Chua added.
“You would continue to see that bifurcation,” he said,
adding that start-ups would have to navigate that separation.
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