(SINGAPORE) Listing on Singapore Exchange's (SGX) secondary board will not be an inexpensive affair. But the sponsors charged with shepherding the companies on Catalist indicated that, given their level of involvement, it would probably be money well-spent.

Market watchers said that purely in dollar terms, the cost of staying listed on Catalist - including the annual listing fee and the fee paid for continued sponsorship - would probably be higher than the mainboard's annual listing fee of $25,000 to $100,000. This, however, would be offset by quicker and more flexible raising of capital and merger-and-acquisition activities on Catalist.

BT spoke to all 16 full and continuing sponsors approved by SGX last month to get a sense of the fees that Catalist companies and listing aspirants could expect to pay on the new-look, sponsor-supervised board.

While several sponsors are still finalising the pricing, a rough picture has started to emerge.

For an initial public offering (IPO) on Catalist, full sponsors are believed to be quoting fees of between $200,000 and $500,000. This is on top of an underwriting fee which is expected to remain unchanged at 3-5 per cent of the IPO size.

After the IPO, sponsors must work with the companies to ensure continued compliance with the rules. This "continuing fees" are expected to range between $50,000 and $250,000 a year - from the second year onward.

This continuing fees must also be paid by companies that were earlier listed on Sesdaq but have now moved on to Catalist.

Sponsors noted that the fees should be commensurate with the level of risk undertaken by the sponsor, the amount of due diligence required, the complexity of the business model, company size and the geographical spread of its business.

"I think market operators may factor in a premium for committing resources on a longer-term basis to service the client," said continuing sponsor CNP Compliance's general manager Benoy Philip. His pricing would factor in the efforts involved in getting the client "Catalist ready" and the cost supporting the client after that.

The unique requirements of each company would make for a broad range of fees.

Also, any comparison with London's secondary board, AIM, must take into account the fact that requirements here are more stringent.

"It would be very unfortunate if the market views and prices the continuing sponsors' services as if they are the run-of-the-mill standardised corporate secretarial or general compliance advisory services," Stamford Law Corporation director Ng Joo Khin said.

"The rather unique and much higher level of responsibility as well as the importance of the role played by the continuing sponsors cannot be overlooked," he added. "If priced too low, it would only encourage players to go for volume work and that is not necessarily the best for the Catalist market."

So far, PrimePartners Corporate Finance (PPCF) is the first to be contracted as a sponsor in JK Tech's transition to the Catalist regime after its reverse-takeover deal with the operator of St James, which will see Singapore's largest nightspot list on Catalist. PPCF director Mark Liew declined to let on the fees it is charging.

As for comparing the fees charged across different boards, Lawrence Wong, executive vice-president and head of listings at SGX, said that each board offers different value propositions and, hence, there are intrinsic values to consider.

For companies formerly listed on Sesdaq and now moving to Catalist, SGX is waiving the annual listing fees for the first three years. During this period, these companies will just pay continuing fees to their sponsors and the annual listing fees of $15,000 to $50,000 will kick in only after that.

Companies that moved from Sesdaq to Catalist have up to two years to engage a sponsor and adopt the new Catalist rules.

A partner at Rajah & Tann Corporate Services noted that the costs involved for a listing on Catalist will certainly be one of the factors that companies will consider in evaluating the options available to them.

Several companies - including Cityneon Holdings, Lorenzo International, Beng Kuang Marine, Thomson Medical Centre and Eastern Holdings - have upgraded to the mainboard of late, raising speculation that the costs associated with Catalist may have been a factor.

"Within the next two years, we expect to see some current Catalist companies which meet all the mainboard's listing requirements to be upgraded to the mainboard," said George Lee, executive vice-president at OCBC Investment Banking.

"However, most companies will remain on Catalist as they are unable to meet all the criteria outlined for a mainboard listing," he added.

Added Keith Magnus, managing director of Merrill Lynch (Singapore): "I think it is a natural evolution as companies develop and gain in size and stature to move to the mainboard - I do not expect to see anything different in this case."

The fee structure on Catalist may take a little while to find its natural level.

On a positive note, Phillip Securities managing director Soon Boon Siong said he expects sponsor fees to ease as more players enter the market with the approval of more sponsors by SGX.