Equity Capital Markets (ECM)

24 Aug 2025 | LexMatch

INTRODUCTION

Companies go to the capital markets to obtain large amounts of funding for their business needs. Capital markets work varies significantly given the many ways in which such funds can be raised both from members of the public or institutional investors. Capital markets deals can be heavily impacted by market conditions. For example, parties and their lawyers may have spent months preparing for an upcoming IPO, only for it to be shelved at the last minute due to an unexpected economic downturn.

The types of capital markets work include equity and debt capital markets, Real Estate Investment Trusts etc. While some law firms have specialised departments which focus on particular sub-areas of capital markets work, there are lawyers who handle the full spectrum of capital markets work.

SUB-AREAS

  • Equity Capital Markets (“ECM”) refers to the stock markets. A private company embarks on an IPO when it is looking to raise money and obtain financing from members of the public. This is done through the listing of the company shares on the stock market for the first time. An IPO is a milestone moment for a company and you will be guiding the company’s management through a very critical period as they seek to adhere to the various listing and disclosure obligations and regulatory hurdles. After the company has been listed, the company may subsequently raise more money by issuing more shares via secondary offerings, such as Placements or Rights Issues, or via a secondary listing on other stock exchanges.
  • Real Estate Investment Trusts (“REITs”) are investment vehicles which hold a portfolio of income-generating real estate assets, with the goal of generating regular distributions of income to unitholders of the REIT. The assets are professionally managed by REIT managers and property managers, and revenues generated from the real estate assets are distributed to the unitholders at regular intervals. REITs are beneficial for property owners because it allows them to optimize capital allocation by monetizing their illiquid real estate assets and enabling redeployment of the proceeds to value accretive investments. The most common type of REIT owns the actual physical property such as offices, malls, industrial properties and hotels, while mortgage and income are derived from the renting or leasing of the properties owned. A REIT may also own and invest in the mortgages of real estate holdings and income is derived from interest earned off the mortgages. The listing process for REITs is similar to a company going through an IPO, though there are certain requirements unique to REITs. REITs lawyers also often advise on M&A and financing activities undertaken by the REITs.
  • Debt Capital Markets (“DCM”) involves the issuance of debt securities (instead of shares in the case of an IPO). The common types of debt securities are bonds, promissory notes and other forms of debentures, which set out the interest/coupon rate and the maturity date upon which the principal sum is to be repaid to the investor.
  • Structured Finance and Securitization work can get very complicated and creative, but typically involves the structuring and bundling of certain types of debt (e.g. most commonly, mortgages) into securities and bonds. These bundles are then issued and sold to investors looking for the cash flow      that comes from the repayment of these debts and the accompanying interest on the debts. The sale of these collateralized debt obligations provides liquidity to the lenders, who receive upfront capital      and pass on the non-payment risk (by the original borrowers) to the investors. Derivatives are a type of structured product that enables one to hedge or speculate on the value of an underlying asset which can span anything from food, commodities, gold and currency. It plays an important role in enabling a company to protect/hedge itself against future price movements that may greatly impact its costs and profitability. Some common types of derivatives include futures, forwards, options and swaps.

WHAT YOU CAN EXPECT FOR ECM (MAINBOARD IPO) WORK

  • Working on IPOs in Singapore means helping a company list on one of two boards: the Mainboard or the Catalist, with the latter having less stringent listing requirements. For example, a Mainboard listing will require the approval of the SGX-ST and the MAS, whereas the approval of a Catalist listing is done by the appointed sponsor. A Mainboard listing also requires the Issuer to satisfy certain quantitative requirements relating to profitability, revenue, operating track record and/or market capitalization, whereas a Catalist listing does not impose such quantitative requirements.  
  • The Kick-Off Meeting starts off the IPO process. The various stakeholders such as the Underwriter, Issue Manager, the key management personnel of the listing company (a.k.a. Issuer) and their lawyers attend the meeting and may discuss the indicative timetable, action plan and deliverables expected from each party. The Issue Manager will be the main coordinator for the IPO process and liaise with the regulators, other professional advisers and the company’s management. The Underwriter refers to the banks that will promote the shares to investors and also agree to take up certain excess shares that are not subscribed for the IPO. The lead Underwriter is often referred to as the Bookrunner, while the title Global Coordinator is given to the banks that are heavily involved in the investor roadshows and presentations. Given that there are some overlaps among the roles, it is not uncommon for banks to take on multiple roles.
  • Due Diligence is then conducted on the company. The lawyer will prepare a list of documents and information required from the company in order to gain a broad understanding of the company and the industry it operates in. The lawyer will identify any key issues that need to be investigated with closer scrutiny, and ensure that disclosures made in the Offering Documents are accurate. Common documents requested would include constitutional documents, corporate resolutions, shareholding composition, list of directors and key officers, licenses and permits, assets and properties, financial and audit records, etc. Other professional advisors will also be involved in the financial and tax due diligence.
  • The Pre-Clearance Stage is where the lawyer identifies issues and checks in with SGX for approval. Usually there will be back and forth communications with SGX, requesting for more information and the process may span a few weeks, depending on the complexity of the issue.
  • Main Offering Documents (such as the IPO Prospectus) will be prepared and eventually lodged with the relevant authority. The prospectus gives an overview of the company, such as its history, business overview, directors and key executives, financial information, litigation matters and future prospects. It also discloses key risks involved in investing in the company. Lawyers will be heavily involved at this stage in drafting and verification meetings to ensure that information included in the offering documents are accurate and substantiated.
  • When all necessary documentation has been prepared, the issue manager will then submit the Listing Application to the SGX-ST on behalf of the Issuer along with the Listing Admissions Pack. The Listing Admissions Pack sets out the key issues for listing and the Issue Manager must also confirm that, after conducting due and careful enquiry, it is satisfied that the Issuer/company has met all the requirements of the Listing Rules and all relevant information has been disclosed to the SGX-ST. At this time, the draft prospectus may also be submitted to MAS for Pre-Lodgment Review.
  • The SGX-ST will then review the listing application. The Issue Manager will liaise on queries that may arise regarding the company and the documents. Upon completion of the review, the listing application will be tabled before the listings committee of the SGX-ST for consideration. After which, SGX-ST will issue an Eligibility-to-List (“ETL”) Letter stipulating certain conditions.
  • Upon issuance of the ETL letter and pre-lodgment clearance from MAS, the Issuer can lodge the preliminary prospectus with the MAS. The preliminary prospectus will be uploaded on its website under the Offers and Prospectuses Electronic Repository and Access, where it will be subject to public comment for seven to 21 days.
  • Once SGX-ST is satisfied that an Issuer has met all the conditions, the Issuer will be admitted into the Mainboard and thereafter the listed shares or units of the Issuer can be freely traded by members of the public.
  • After the listing, the company will need to comply with continuing listing requirements set out in the SGX-ST Listing Rules, including announcing information that may materially affect its stock price, announcing certain changes in shareholdings and periodic publication of its financial statements. External legal advice may be sought as to whether a particular event or transaction falls within the remit of the Listing Rules and if so, what approval needs to be obtained or what disclosure needs to be given. This includes the major event where a listed company is involved in a Public M&A transaction.