Corporate finance firm W Capital Markets has raised a new round of funds that brings its valuation to $42 million. At its last fund rais­ing back in May 2021, the firm’s val­uation was $21 million. Investors in the current round included institu­tions, notable businessmen in their personal capacities, and a multibil­lion single family office.

Wayne Lee, executive chairman of W Capital, says the new funding will help boost expansion plans, in­cluding the acquisition of other firms to gain access to clients and helping companies get a public listing.

“Capital market and M&A activities had been subdued in the last three years because of high interest rates. I’m very optimistic more M&A trans­actions will be completed this year. The valuation gaps between inves­tors and promoters of business will be narrowed significantly this year,” says Lee in an interview with The Edge Singapore.

Recognising how vibrant the US markets are, W Capital is also get­ting ready to help at least three Sin­gapore companies list on Nasdaq. One of these companies is in robot­ics, while another is in the consum­er industries. Lee says W Capital’s mandates include helping a local list­ed company spin off a subsidiary for a separate listing in the US, although he cannot provide more details for now. Besides helping to float other companies, W Capital has ambitions to launch its own IPO “when condi­tions are right”, he adds.

While Lee and his clients are drawn to the US, as the head of a home­grown firm, Lee is upbeat that the market review now undertaken by the government is one being con­ducted with “conviction and polit­ical will” and should lead to a bet­ter outcome for what is otherwise a “moribund” Singapore market. “I’m hopeful that the stock market will re­cover and the IPO market will also come back,” he adds.

Wayne Lee of W Capital is “very optimistic” that there will be more M&A deals this year

Meantime, he has a few sugges­tions on how to improve the market ecosystem. One example is to remove a requirement that sponsors of Catal­ist companies to have a track record of helping to complete at least five IPOs in the last 10 years.

Lee reasons that with the retire­ment of more seasoned profession­als, there are fewer qualified people around. Furthermore, with the dearth of new listings here, a newer genera­tion of corporate finance profession­als would have struggled to meet this specific requirement. “This basis is no longer relevant,” he says.

Lee believes that some measures can be introduced to beef up the par­ticipation of institutional investors, in­cluding government bodies such as CPF and even family offices, in small and mid-caps. The Singapore market has reached near all-time highs in re­cent weeks, but that is predominantly driven by the three banks that make up half the index, plus a handful of other Straits Times Index component stocks such as Yangzijiang Shipbuild­ing and Singapore Telecommunica­tions. By having greater participation in a structured way, other investors will be encouraged to participate too, which will help lift overall trading volume, he says.

On their part, some of smaller com­panies have not been doing themselves a favour. Lee observes that several small- and mid-caps here have been hoarding cash to the point that their market cap is way below their net cash level. Yet, some of these com­panies have not been paying out div­idends, saying they need to preserve cash if they record losses, further de­pressing share prices. In contrast, the three banks have articulated capital management policies, guiding them to return excess capital to sharehold­ers through higher dividends or share buybacks. “These are examples of in­efficient capital allocation that require regulatory attention. The Monetary Authority of Singapore review group may like to consider implementing measures on such companies to en­hance shareholders’ value,” he says.

Also, there has to be an increase in the quality of new listings. In the past few years, the Singapore Ex­change has not been attractive as a listing venue, so it could only list companies generally of lower quali­ty. “And of course, we need the eco­system stakeholders, including the IPO sponsors, lawyers, auditors, to do our part,” says Lee.

A vibrant equity market with good-quality IPOs is essential to mak­ing Singapore a world-class financial centre. The IPOs provide exit options for venture capital and PE (private eq­uity) firms. “Furthermore, the wealth effect created from a vibrant stock market will benefit institutional and retail investors and also help rebuild the whole ecosystem of economic ac­tivities, including investment banking and stockbroking, legal, IPO auditing and other stakeholders,” says Lee.

W Capital is also involved in PE. Thus far, it has invested in Otsaw, a local robotics company that provides machines used in hospitals here and in Germany to perform tasks such as moving laundry and delivering meals from the central kitchens to different wards. Lee says the value of W Cap­ital’s investment in Otsaw has thus far improved by fourfold.

This year, W Capital’s private eq­uity unit plans to make at least one or two more investments in healthcare and the fast-moving consumer goods sectors, which are more defensive.

According to Lee, global markets and the economy have grown in re­cent years, but as all things are cy­clical, this might change and a major global slowdown or even recession might take place. “At least for these two years, we should still see good economic growth but anything af­ter the next three years is tough. So, when we select new investments, we need to be prepared,” he says.