SGX’s First FinTech Company IPO – Ayondo

Ayondo – An European originated company that provides social trading and brokerage services announced its IPO and set to be listed on SGX on 26-Mar.

 

The 2 ‘Keywords’

Browsing through the headlines of media reports for the IPO, SGX Observer realised the 2 most associated keywords are ‘FinTech‘ and ‘Loss-Making‘.

 

Ayondo – Company History

According to the offer document (link), history of the company is quite interesting. Below is the summarised version by SGX observer. For complete info, refer to page 134 to page 138 of the offer document.

  • Jan 2009: An investment holding company ‘Next Generation Finance Invest AG‘ was founded.
  • Jan 2009 to Nov 2009: Next Generation Finance Invest AG invested in ayondo GmbH (6.62% stakes, with consideration of Euro53,333), Oanda Corporation (less than 0.5% stake, with consideration of CHF684,000), Brady plc (less than 0.5% stake, with consideration of CHF69,000), Sycap UK (8.52% stake, with consideration of £750,000)
  • Mar 2010: Next Generation Finance Invest AG was listed on Berne Stock Exchange in Switzerland.
  • Apr 2010 to Dec 2013: invested in 2iQ Research GmbH (16.6% stake, with consideration of CHF482,000), sold entire stake in Brady plc (with consideration CHF85,000) (gain of about CHF16,000), increased stake in Sycap UK (to 46.65%, with consideration of £1,134,433), invested in Yavalu GmbH (10.34% stake with consideration of CHF183,000), invested in Stockpulse GmbH (11% stake, with consideration of CHF158,000).
  • Jan 2014: Received investment of CHF5,000,000 from Luminor Capital Pte Ltd.
  • Feb 2014: Increased stake in ayondo GmbH to 93.43%.
  • Mar 2014: Next Generation Finance Invest AG changed its name to ayondo AG.
  • Apr 2014: ayondo AG voluntarily delisted from Berne Stock Exchange.
  • July 2014: Incorporation of ayondo Asia.
  • Aug 2014: Luminor Capital Pte Ltd invested S$4.2 million in ayondo Asia.
  • Apr 2015: Luminor Capital Pte Ltd invested another S$5.0 million in ayondo Asia.
  • Jun 2016: Entered into a conditional sale and purchase agreement with Starland Holdings Limited in relation to the proposed acquisition of the entire equity interest of ayondo AG.
  • Sep 2017: The conditional sale and purchase agreement with Starland Holdings Limited lapsed.

 

In case you wonder –

  • ‘AG’ is an abbreviation of Aktiengesellschaft, which is a German term for a public limited company. 
  • ‘GmbH’, which is written after the name of the company, designates a company as private in Germany. The letters stand for Gesellschaft mit beschränkter Haftung which, translated literally, means a ‘company with limited liability’.

1 CHF (Swiss Franc) = about 1.35 ~ 1.45 SGD (Singapore Dollar)

 

Data from 4-traders.com shows that share price of Next Generation Finance Invest AG performed pretty well during its listing on Berne Stock Exchange.

NFGN Share Price
NFGN Share Price

 

But it seemed ayondo AG was already loss-making in 2013 according to its financial report… http://www.nextgfi.com/media/38813/gesch_ftsbericht2013_ayondoholding_2014-06-10.pdf

 

 

… and continue to be in loss-making state ever since then, according to its IPO product highlight sheet (link)

Ayondo Financial Position
Ayondo Financial Position

 

 

Nevertheless, Luminor Capital has invested more than S$15 million in ayondo AG since 2014.

 

Ayondo – The IPO

According to the offer document:

  • The IPO aims to raise gross proceeds of approximately S$21.0 million and net proceeds of approximately S$18.5 million, by offering total of 80,770,000 shares at S$0.26 per share. 
  • 40.5% of the gross proceeds (S$8.5 million) raised will be used for repayment of loans while the remaining for business expansion and general working capital.

 

Market capitalisation of Ayondo Ltd based on the Invitation Price and post-Invitation share capital of 502,666,210 Shares = S$130.7 million.

 

Use of proceeds

Reading further, audit total liability of the group as at Sep 2017 is CHF72,665,000.

Out of the S$8.5 million set aside for loan repayment, S$1.9 million is to pay for the INTEREST ACCRUED for convertible bonds (maturity date of the bond was already due on 31 Dec 2017) issued to the following

  • Luminor Capital (CHF9,200,000)
  • Kwan Chee Seng (CHF790,000)
  • Foo Fatt Kah (CHF390,000)
  • Kantilal S/O Champaklal Ramdas (CHF120,000)

 

while the remaining S$6.6 million is to pay for shareholder loans, with interest rate ranges of 8% per annum, from the following.

  • Thomas Winkler (Executive Chairman of ayondo)
  • Baltische Bauentwicklungsgesellschaft mbH
  • Global Money Ventures AG ( 50% owned by Thomas Winkler)
  • Kwan Chee Seng
  • Foo Fatt Kah
  • Starland Holdings Limited (SGX listed)
  • GRP Limited (SGX listed)

 

Note that..

  • Luminor Capital is owned by Foo Fatt Kah (50%), Kwan Chee Seng (30.0%) and Kwan Yu Wen (20%).
  • Starland Holdings Limited is 83.17% owned by GRP Limited.
  • GRP Limited is 32.5% owned by Kwan Chee Seng.

 

… and it is IMPORTANT to know that..

about 23,751,372 shares have been acquired by ‘Pre-IPO investors’ at the discounted price of S$0.17 per share, arises from the options of ‘Pre-IPO Convertible Loans’ given, as well as the repayment of expenses incurred in relation to the proposed acquisition by Starland Holdings previously.

Recall that 80,770,000 shares offered to public are priced at S$0.26 per share !!.

 

 

Is Ayondo IPO A Good Deal Or Not?

Well, depends on who you are –

If you are one of the major shareholders, the deal won’t be bad at all.

If you are one of those who ‘lend the helping hands’ by offering the ‘Pre-IPO Convertible Loan’ with 8% interest per annum, and the subsequently offered the conversion to share at 33% discount, it sounds pretty good too.

If you are the public subscriber who is thinking of trying out your luck, it may not be as good, since you are offered at S$0.26 per share while there are people getting it at S$0.17.

And for Luminor Capital who previously invested about S$15 million to the company, referring to page 73 of the offer document, immediately after the invitation, with the 101,174,765 shares directly held, its market value becomes S$26 million upon listing of the shares at S$0.26.

 

That’s the beauty of capital market – “profitable business” and “positive investment return” need not come hand in hand. 

 

 

 

Disclaimer: SGX observer is just a layman investor and not professional accountant or analyst or financial guru. The interpretation is purely from personal point of view, and the interpretation could be wrong. Appreciate your kindness to point out any incorrect concept or mistakes you spotted.

 

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