A cyclist rides in front of the city skyline at Marina Bay in Singapore.
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SINGAPORE – According to the CEO of Vertex Holdings, going public is expected to be the main exit for most startups in the near future as companies are likely to put their merger and acquisition plans on hold due to the coronavirus pandemic.
Vertex is the venture capital arm of Singapore government investor Temasek Holdings, managing more than $ 3 billion in assets and over 200 active portfolio companies. The company has six network funds that invest in young tech startups, healthcare startups, and growth-stage companies that span places like the United States, China, Israel, Southeast Asia, and India.
"I think the IPO market will continue to be strong based on what we can see so far. I think the US market will remain strong in the short term and then continue to be a very strong IPO market for the Chinese market as well. " Chua Kee Lock said "Squawk Box Asia" on CNBC's Monday.
Vertex has two companies that Chua says are planning to go public next year, one in the US and the other in China. The company has endorsed several prominent names, including the Southeast Asian giant Grave.
IPOs will be "the main way out for most startups," Chua said, adding, "But at the same time, if things improve, we may look for some bigger companies in the second half of next year Opportunities and they will begin to acquire businesses in this region and even other parts of the world. "
Despite the global economic uncertainties surrounding the coronavirus pandemic, a significant number of companies have already gone public this year – particularly in the technology sector in both the US and China. And more are due for their debut, including Airbnb and DoorDash. This year’s much-anticipated IPO should take center stage in Hong Kong and Shanghai, where Alibaba subsidiary Ant Group, which operates the massive Alipay system, should go public before the record list was suspended.
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The trade war and growing tech rivalry between the US and China remain on the radar for investors and businesses alike. Although 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 that tensions between countries are unlikely to go away under a Biden administration.
Vertex's Chua said he expected trade tensions to persist among Biden for the foreseeable future. China will view the US as an unreliable supplier and will therefore drive the development of domestic companies and industries, he said. The US would continue to see China as a threat and work to keep critical technologies out of the country, Chua added.
"You would keep seeing that fork," he said, adding that startups need to manage that split.