Breaking new ground: the story behind the SIA and SBS IPOs

16 July 2018

Photo: Everything I Do/

Over the years, DBS has lead managed various significant initial public offerings (IPOs) in Singapore, including the first international IPO of a local firm (Singapore Airlines, 1985) and one of the largest IPOs in Singapore’s history (Singtel, 1993).

Tan Soo Nan was involved in many such listings over the course of his nearly 30 years at DBS. He shared his experience working on the SIA IPO amid a market crisis and other key projects in DBS’ 20th anniversary Banknotes. His story is reproduced here.

Buses, planes and the stock exchange

My experience with merchant banking, or more accurately, corporate finance in DBS Bank, began in 1973 as an officer who had only a couple of years’ service in credit and commercial banking. Under the guidance of Manager Ang Kong Hua, I tackled my first project, that was launching the convertible bond issue for National Iron & Steel Mills Ltd.

Looking back, it was a personal milestone as well as one for the bank because the issue raised the challenge of educating the market that a convertible bond should generally be issued with a lower coupon rate compared to a fixed rate bond. We made a calculated decision to cut the coupon rate; that set the trend for other convertibles.

Once the spirit of innovation caught on, there was no stopping us from getting ahead in the industry, especially where corporate finance was concerned.

Corporate finance activities began in 1972 with the launch of the first Asian Dollar Bond issue for the Government. In the early years, we handled most of the issuing house activities including share processing. Most of these functions are now handled by share registrars.

Because we were constantly breaking new ground, the pressure was great as we had no local precedent to fall back on and there was therefore a higher degree of uncertainty. Although the pressures facing corporate finance officers today are not that different, i.e. pressure from the public and the client, we now have the benefit of experience and a more regulated securities market.

I remember Kong Hua consoling me, “If you can’t sleep because of the pressure, it’s only natural.” We had an interesting time together.

Another interesting project which I would consider a milestone in corporate finance happened in 1978. The bank was appointed adviser manager for the reconstruction of Singapore Bus Service Ltd (SBS).

The public was given an opportunity to invest in a reorganised SBS, and, for the first time, Central Provident Fund (CPF) funds were allowed in the purchase of shares. The bank, together with CPF and the Exchange, worked out the system for paying with CPF funds.

That issue also posed us another challenge in that, there was a decision taken after the issue closed, that those who owned a car would not be given a lot! This meant that we had to work with the Registry of Vehicles. It was a nightmare but we survived.

Photo: sunsetman/

The SIA share issue we lead managed in 1985 is the other milestone that comes to mind. It was then the largest public issue in Singapore and the first international offering for a locally incorporated company.

Many institutions in the market thought it was impossible to put into effect such a scheme. But upon our success, it was actually suggested that we document it as a model for future international equity syndications. Perhaps we could have made it to the Harvard School of Business as a case study if we had taken the suggestion seriously.

The SIA issue was also memorable in that, having achieved a good primary offering, the Pan-Electric crisis hit the market just before the secondary listing, resulting in the closure of the market for three days.

Countless meetings and nights of deliberations ensued on how we should proceed with the issue, if at all. In the end, logic prevailed.

Because of the SIA name, Singapore’s standing and because the issue was so firmly placed, we knew that the issue could stand on its own merit although in the short-term the price might fall. Events have proved us right.

But merchant banking is now more than corporate finance, which tends to carry the glamour.

Our move into investment management and trustee nominee services were natural extensions of and as important as the work we do in capital markets. Those in investment banking would have had their fair share of excitement as well as frustration. Some would have seen the market crashes of 1973, 1981 and the recent “October 19”. During crashes of that magnitude, it becomes a people problem and the manager has to sit down with his officers to prevent a panic epidemic.

One lesson I learnt from Mr Howe Yoon Chong that has stayed with me till today is to support staff who are good and talented. It’s almost like teaching that person, putting him under your wing, so that person will grow with you as you pass on your experience.

My other thought for the day is we should never stop responding to the changing needs of our customers as only then can we continue to grow.

Tan Soo Nan was at DBS from 1971 to 2000. During his 29-year career, he covered the spectrum of commercial banking, investment banking, asset management and venture capital. As Senior Managing Director of DBS Bank, he was in charge of Institutional, Individual and Enterprise Banking, as well as the Private Client Group business. He would later be Chief Executive Officer of Singapore Pools. He is currently a director at Raffles Health Insurance.