Following several attempts, Axington is set to shed its status as a shell company. Under new controlling shareholders following a long-drawn reverse takeover deal, Axington will morph into a distributor of electronics keen to grow beyond Asean with an expanded product portfolio.
Under the deal, Axington is paying $27 million in new shares at 23.6 cents each for Serial Achieva to be injected into its shell.
The new owners of Serial Achieva are also placing out shares worth $2.5 million to new and unrelated shareholders to meet the minimum free-float requirement. Proceeds from the placement will be used to expand its business and for general working capital. “Whether it is an RTO [reverse takeover offer] or IPO, it’s just a means to an end, and the end in this particular instance is for us to be able to raise funds from the market,” says Sean Goh, chairman of Serial Achieva, when asked about the reason for choosing a backdoor listing.
Axington was a former management consulting company that was bought over by cousins Nelson and Terrence Loh in June 2020. In August 2020, the Lohs made headlines for the wrong reasons for releasing doctored images of themselves with former US President Barack Obama. This was part of their publicity grab to announce a takeover of English football club, Newcastle United, through their other company, Bellagraph Nova Group (BN).
The Lohs had wanted to turn Axington into a company with businesses such as medical aesthetics but things fell apart quickly after news of the photo manipulation broke, triggering intense scrutiny from the wider investment community and creditors.
Following the ruckus, Axington announced in July 2021 a plan to acquire for $405 million a Chinese information services business. That proposal fell through. A year later, Axington entered into reverse takeover talks with Mushan Food Industries, which had operations in both China and Malaysia. Similarly, the negotiations fell through. Two months later, the proposed RTO involving Serial Achieva was announced.
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The businesses that now form Serial Achieva are under the control of another listed company, Serial System S69 , whose executive chairman is Derek Goh, elder cousin of Sean Goh.
According to the younger Goh, who is the deputy CEO at Serial System, until the possibility of the RTO with Axington came along, Serial Achieva had not been “looking for any IPO” of sorts. Nonetheless, Goh figures that if the deal can be completed, it will be a “win-win solution” for both parties involved.
“Whether you go through an RTO or IPO, the regulatory compliance, the process, the timeline, is more or less the same. But since the opportunity presented itself in the form of an RTO, we decided to take it, and one of the key reasons is we can help the existing shareholders and the shell company (Axington) to be able to liquidate their shares subsequently when we get the shell company out of suspension,” says Goh.
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He explains the RTO took more than a year as the regulators were trying to thoroughly understand Serial Achieva’s business model, especially in regards to its business overlap with Serial System.
“While the core underlying business is in distribution, Serial System deals in electronic components whereas Serial Achieva deals in what I call semi-finished products at the computer peripheral level,” explains Goh.
Nature of the business
Simply put, Serial Achieva distributes parts more geared towards consumer electronic products like computers and gaming consoles. Its principals include AMD, Intel, MSI and Gigabyte while its product portfolio includes laptops, server CPUs, server motherboards, GPUs, VGA cards, solid-state drives and computer monitors.
Serial System, on the other hand, is involved with more specific sub-components such as semiconductor resistors and capacitors.
As such, both companies have “completely different” customers and suppliers, and therefore, no business overlap. Goh continues: “If you take notebooks for example, Serial System supplies components that go into making the notebook work while Serial Achieva will sell that notebook to you.”
Serial Achieva is mainly active in Malaysia and Thailand, serving around 1,390 customers. It sees good growth prospects within Asean, particularly in Indonesia, Vietnam and the Philippines, with discussions about joint ventures with suppliers in the region already underway.
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“The funds from the RTO will go towards mainly building our business because the plan is for us to regionalise the business in the form of organic growth or joint ventures. Part of it will also go into the capital requirements of the company,” says Goh.
While plans for the business to have operations in Singapore are “definitely in the sketchbook”, Goh prefers to expand its current product line first, such as finding ways to ride on the current AI wave. Already, there have been talks with a company that manufactures AI servers, which he hopes to share more details down the road.
Although Asean looks to be fertile ground for digital growth— the region’s burgeoning internet economy is projected to be worth some US$330 billion ($446.4 billion) in 2025 and its AI market projected to reach a staggering US$30.3 billion in value by 2030 — this potential does not translate to a business operation devoid of challenges.
Goh explains: “The biggest challenge any Singapore-based company with overseas operations will face is managing cross-cultural expectations and relationships. This is why when we went into Thailand, we did not do so alone. We identified a customer of ours, which we went into a joint venture with.”
He continues that forming a partnership with a local player allows smoother communication with clients and builds trust, as Singaporeans are culturally “more straightforward” in business dealings than regional peers, which could result in unmet expectations.
Interestingly, for all the recent supply chain woes afflicting global trade, Goh is not too worried. “If we are talking about supply chain disruptions in the form of countries closing and not allowing goods to be imported or exported, it doesn’t exist in our business, at least in Asean. There are stoppages of goods that exist from time to time because there will always be a mismatch of demand and supply in whatever industry that you operate in,” says Goh.
Even more so, he sees the region benefitting from certain geopolitical complications such as those between the US and China: “While companies like Nvidia, AMD and Intel have issues exporting high-performance computing products to China, it presents an opportunity for us here in Asean as data centres can no longer be built in China. This means AI data centre operators and cloud service providers have to set up their bases in Asean.”
The next step
Despite the unpredictability of geopolitics, Serial Achieva has the ambitions to expand beyond the region, by tapping on its established positioning. “It’s probably too quick to put a timeline to it, but one of the countries we are looking to expand into is India. It is definitely in our long-term plans,” says Goh.
According to him, India not only has a population that has surpassed China but also an immense number of young people, which he notes is a “perfect fit”. In addition, the country has had a stable government for years. “We believe that India is a place we need to be in,” he says firmly.
Along with growing its geographical portfolio, Serial Achieva is also keen on increasing its product range, especially in AI-related products, although semiconductors are strictly off limits as its parent company is already distributing them.
Instead, products such as video graphic processing cards or VGAs, a component made from graphic processing units, are distributed by the company. Goh highlights that although the VGAs distributed are currently not specifically geared towards AI, they are the key component inside any AI-related computational machine and are “driving the whole AI market today”.
“Without the AI component side of things, because we are just starting on it, VGAs take up probably about 15% of our product share, but we envisage that it will take a decent percentage in the next year or so,” says Goh.
If all goes well for Serial Achieva, the chairman would like to embark on more fundraising plans, although no specific strategy has been set in stone.
He explains: “The fundraising portion is largely dependent on how successful we are right in executing the strategies that we have put in place. So, as we embark on more JVs, there will be the need for more working capital as we move into different segments or bring on more product lines.”
Goh plans to bring the company up the value chain as well.
Instead of selling a CPU which typically costs about $200 or a motherboard costing $150, the company could start selling high-end products like AI servers for example, which cost anywhere between US$250,000 and US$350,000.
“When we sell these servers to cloud service providers, it’s not going to be 10 or 20, it’s going to be hundreds or thousands of them. If we can do that, then it means we are doing the right things in terms of implementing our strate`100gy,” says Goh.
