Over the last few weeks, as most market players sat back and took a breather for the year-end festive season, a surprisingly big crop of IPO aspirants and their professional advisers were putting together the final touches for their market debut.
In the last two weeks of 2021, four companies lodged their preliminary IPO offer documents, while two companies received their go-ahead from the Singapore Exchange (SGX) for a spac (special purpose acquisition company) listing, with one more obtaining its spac listing permission just after the new year. In contrast, for the whole of 2021, there were just eight listings. After Aztech Global’s relatively sizeable launch in March 2021, SGX’s IPO activity level dwindled pretty much for the rest of the year — only to pick up last December, when two REITs, Daiwa House Logistics Trust, followed by Digital Core REIT in quick succession, were launched.
Evidently, the listing momentum was already building up.
LS 2 Holdings
Firstly, just a day before Christmas Eve, LS 2 Holdings, a homegrown integrated environmental services provider, submitted its preliminary offer document for a Catalist listing.
Besides providing cleaning services, LS 2 provides pest control and waste management services too.
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While the company has a headcount of around 2,000, it taps on a network of subcontractors as well.
In its audited FY2020 ended December 2020, earnings came in at $7.3 million, a surge from FY2019’s $1.0 million as revenue grew to $54.6 million in FY2020 from $49.0 million in FY2019. The revenue growth was due to new contracts secured from a new customer which were completed within the financial year as well as the completion of several contracts secured in FY2019.
In FY2020, LS 2 recorded net cash of $10.9 million from operating activities, compared to net cash expenditure of $1.1 million in FY2019.
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With a listing on the Catalist Board, the company intends to fund proceeds for its business expansion and working capital.
RHT Capital is the issue manager and full sponsor while Soochow CSSD Capital is the placement agent.
Alpina Holdings
Alpina Holdings, the next listing aspirant, is a Singapore-based contractor specialising in providing integrated building services (IBS), mechanical and electrical (M&E) engineering services, and additions and alterations (A&A) works. It lodged its preliminary offer document for a Catalist listing on Dec 30, 2021.
The company intends to raise proceeds to fund its business expansion, strengthen and accelerate the extension of its integrated facilities management (IFM) services, as well as for general working capital.
In its audited FY2020 ended December 2020, earnings came in at $5.0 million, more than double of the $2.6 million in FY2019. This was despite revenue dropping from $43.1 million in FY2019 to $37.9 million in FY2020, mainly due to a decrease in revenue from its IBS and A&A business segments, offset by an increase in revenue from its M&E business segment. The reason for the increase in earnings in FY2020 was due to the Covid-19 support grant received in FY2020 from the government. Currently, Alpina’s projects are non-recurring in nature. Hence, its projects are typically on a one-off basis and awarded on a project-by-project basis.
UOB is the sponsor, issue manager and placement agent.
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iWOW Technology
iWOW Technology, which stands for inspiring the World of Wireless, lodged its preliminary offer document on the same day as Alpina Holdings: Dec 30, 2021. The technology provider specialising in integrated wireless IoT solutions as a service plans to put the funds it raises from the IPO to grow its customer base, expand its market reach, enhance research and solution development activities and expand its business through partnerships and investments.
Currently, iWOW provides four key solutions to its customers. A key product includes the white oval-shaped trace together tokens that are in widespread use. A second important product is iWOW’s smart metering solutions to enable remote monitoring of utilities, providing full transparency and insights into energy and water consumption within buildings. Temasek-linked companies are customers of iWOW’s smart metering solutions.
The company’s so-called alarm alert system is a wireless emergency distress system that caters to the elderly, which is a rising demographic across East Asia. The fourth product is an electronic monitoring system (EMS) to monitor ex-offenders and accused persons while they are out on bail or have been released under a remission order.
In its latest audited FY2021 ended March 2021, iWOW recorded earnings of $3.7 million, an increase from merely $22,000 in FY2020 as revenue for FY2021 came in at $26.4 million from $4.4 million in FY2020.
The fivefold increase in revenue was mainly due to revenue derived from the sale of TraceTogether tokens for its smart city solutions segment. Higher recurring revenue from EMS as well as new contributions from the alarm alert system project also contributed to the growth of the IoT-as-a-Service segment.
Evolve Capital is the sponsor and issue manager while Futu Singapore is the underwriter and placement agent.
Oiltek International
Meanwhile, Koh Brothers Eco Engineering is finally going ahead with the planned listing on the Catalist Board of its 80%-held indirect subsidiary Oiltek International. Koh Brothers Eco Engineering on Jan 23, 2020, first announced its interest to spin-off Oiltek and the preliminary offer document was finally lodged on Dec 31, 2021.
Koh Brothers Group and Penta-Ocean Construction are the controlling shareholders of Koh Brothers Eco Engineering with stakes of 54.3% and 28.8% respectively.
Oiltek is a Malaysia-based integrated process technology and renewable energy solutions provider in the vegetable oils industry. It can process the various major vegetable oils including palm oil, soybean oil and rapeseed oil, which are some of the major agricultural commodities in the world.
In its latest audited FY2020 ended December 2020, earnings were 44.1% higher y-o-y at RM8.4 million ($2.72 million) as revenue for FY2021 was RM87.5 million compared to RM80.2 million in FY2020. The revenue increment was due to an increase in the renewable energy segment and the product sales and trading segment. This was partially offset by a decrease in its edible and non-edible oil refinery segment.
With this listing, the group intends to fund its working capital to expand business operations by securing more projects and projects of a larger scale as well as expand its business through investments and partnerships.
SAC Capital is the sponsor, issue manager, underwriter and placement agent.
Spac listings
But what the market would probably watch with greater interest, is the crop of so-called special purpose acquisition company (spac) listings that are impending. In recent years, spac has become a popular, alternative way for companies to go public, where funds are first raised by a “blank cheque” company in an IPO before a merger with a target company thereafter. This is different from a “regular” listing, where companies would go public by directly listing their shares on a stock exchange.
This trend has reached the shores of Singapore after SGX on Sept 2, 2021, announced new rules that enable spacs to list on its Mainboard.
“SGX’s spac framework will give companies an alternative capital fundraising route with greater certainty on price and execution. We want the spac process to result in good target companies listed on SGX, providing investors with more choices and opportunities. To achieve this, you can expect us to focus on the sponsors’ quality and track record. We have also introduced requirements that increase sponsors’ skin in the game and their alignment with shareholders’ interest,” says Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo).
Some of the key features of listing under the spac framework include a minimum capitalisation of $150 million, de-spac has to take place within 24 months of IPO with a possible extension of up to 12 months, sponsors must subscribe to at least 2.5%–3.5% of the IPO shares, and de-spac can proceed if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction.
Shortly after SGX announced the spac listing framework, it saw a wave of sponsors who expressed their interest. Since then, three companies have gotten their permission from SGX to list on the Mainboard.
However, there are some signs that the US spac market, which was vibrant throughout 2020 and 2021, has somewhat cooled down. Case in point: Singapore-based superapp company Grab Holding’s Nasdaq debut on Dec 2, 2021, saw its share price pop by some 18.6% to US$13.06 ($18.43) at the opening bell. Several research houses have initiated coverage with price targets in the mid-teens. However, investors seemed to be unmoved so far. Grab’s share price closed at US$7.29 on Jan 5.
Back in Singapore on Christmas Eve, Temasek’s Vertex Venture announced it has received a Christmas present from SGX: the eligibility to list a spac on the Mainboard, making it the first to get the go-ahead. Vertex is also the first to submit its preliminary prospectus on Jan 6, offering some 40 million units at $5.00 per unit.
Less than a week after Vertex, on Dec 30, 2021, global alternative asset manager Tikehau Capital and its partner Financière Agache, the family office of LVMH Group controlling shareholder Bernard Arnault, got its SGX approval too.
The sponsor group has incorporated its spac — Pegasus Asia. The listing is subject to certain conditions as well as the broader market environment.
Tikehau and Financière Agache plan to invest $62 million in the spac through the subscription of units and an unconditional forward purchase agreement. This is in addition to the sponsor’s initial contribution of up to $10 million of “at-risk” capital by purchasing warrants in the private placement. Temasek is also a shareholder of Tikehau.
Separately, The Edge Singapore understood on Jan 4 that Tikehau aims to file its preliminary prospectus later that week and Pegasus Asia, the Spac sponsored by Tikehau Capital, Financière Agache, Diego De Giorgi and Jean Pierre Mustier filed on Jan 6. Some 25.6 million units at $5 each will be offered, raising some $128 million.
Most recently, Bloomberg reported that Novo Tellus Capital Partners on Jan 4 received permission from SGX to list its blank-cheque company, according to people with knowledge of the matter.
The buyout firm got the eligibility-to-list letter last month for its spac, the people said, asking not to be identified as the information is private. Novo Tellus Acquisition Corp plans to raise $150 million to $200 million from this listing. With the go-ahead from SGX, Novo Tellus plans to file its preliminary prospectus sometime in January. — with additional reporting by Khairani Afifi
Photo: Bloomberg
