Ayondo’s SGX Catalist Listing – Why?

Ayondo IPO Balloting Results

 

Ayondo announced its IPO balloting results yesterday evening.

Extraction from the annoncement (link):

 

Following the close of the Application List at 12.00 noon (Singapore time) on 22 March 2018, the Board of Directors of the Company is pleased to announce that the applications received for the Placement and applications received for the Offer as at the close of the Invitation are as follows:

  1. The Placement Based on the 71,870,000 Placement Shares available under the Placement, and the total valid applications amounting to 71,870,000 Placement Shares, the Placement was fully subscribed for and purchased.
  2. The Offer As at the close of the Application List at 12.00 noon on 22 March 2018, excluding applications by connected persons and persons mentioned in Rule 428 of the Catalist Rules, there were 875 valid applications made by way of Application Forms or Electronic Applications for a total of 40,356,900 Offer Shares, with application monies received from such applications amounting to approximately S$10.5 million. Based on the 8,900,000 Offer Shares available under the Offer in Singapore, such valid applications represent approximately 4.5 times of the Offer Shares.

Based on (i) the valid applications received for the Offer Shares at the close of Application List and (ii) the valid applications received for the Placement Shares, and in each case excluding applications by connected persons and persons mentioned in Rule 428 of the Catalist Rules, the Invitation is approximately 1.3 times subscribed.

 

How much does Ayondo raised by listing on SGX Catalist?

According to its offer document (page 63), gross proceeds from the invitation is S$21 million ( = S$0.26 per share x 8,900,000 invitation shares.), as shown below.

… and 40.5% of the proceeds (S$8.5 million) is meant for repayment of loans, S$9.5 million to be used as working capital and business expansion (marketing spend and platform enhancement).

Ayondo - Proceeds From IPO Invitation
Ayondo – Proceeds From IPO Invitation

 

 

… and the S$8.5 million ‘repayment of loans’ is meant to repay the following items (page 63, 64 of offer document):

Ayondo - Repayment of Loans (1)
Ayondo – Repayment of Loans (1)

 

Ayondo - Repayment of Loans (2)
Ayondo – Repayment of Loans (2)

 

 

Let’s take a closer look – what it indicates is the proceeds from the ‘invitation’, and this is different from proceeds from the ‘listing’.

 

 

Why so ?!

Let’s look at its share capital details.

 

According to its offer document (page 71):

The number of new Shares Issued for the invitation = 80,770,000 (S$21 million), as boxed in green in the figure below.

However, together with the invitation are the issuance of Shares for 3 other items boxed in blue:

  • conversion of pre-IPO loan
  • amount incurred and owed to Starland Holdings due to the failed reserve takeover
  • fee amount to be paid to UOBKH as placement agent and catalist sponsor,

and total amount of these 3 items = S$6.828 million.

 

SGX Observer thought the 1st and 2nd items should also be classified as ‘repayment of loans’ while the 3rd item as ‘listing expenses’. However, since they are not ‘paid by the proceed of invitation’ but offset by issuing more shares, they were not grouped as under ‘Use of Invitation Proceeds’.

 

Ayondo Share Capital Post IPO Invitation
Ayondo Share Capital Post IPO Invitation

 

Nevertheless, if we refer it as ‘Use of Listing Proceeds’, the ‘gross proceed’ would be S$27.238 million (instead of S$21 million) and amount use to repay loans would be S$15.338 million = 55% of listing proceeds (instead of 40.5%).

 

Upon listing, Ayondo will be become debt-free, and leave with about S$10 million cash in pocket to spend, despite being loss-making continuously for more than 4 years. Magic !

 

But…  for the first nine months of 2017, Ayondo already incurred a net loss of 6.6 million Swiss francs (S$9.1 million). So the S$10 million cash won’t last for too long…

 

Reading CNA’s report (link)~

(Ayondo’s CEO Mr. Robert) Lempka was unable to estimate when the company might turn a profit, but added that revenue was growing more than costs and that “those lines will cross at some point”.

 

Probably ‘turning profit’ is not what the CEO is trying to achieve, since he didn’t bother too much on when the company might turn to profit.

As indicated at page 38 of offer document regarding ‘Purpose of Invitation’  –

Our Directors believe that the listing of our Company and the quotation of our Shares on Catalist will enhance our public image locally and internationally and enable us to raise funds from the capital markets to fund our business growth. The Invitation will also provide members of the public, our management, employees and our business associates, and others who have contributed to the success of our Group with an opportunity to participate in the equity of our Company.

 

Moving forward, you’ll probably see Ayondo being labelled as ‘The 1st SGX Catalist Listed FinTech company‘, instead of ‘The Loss-Making FinTech Company’.

 

Submitted your application to the IPO but didn’t get the offer this round? Don’t worry, next round of rights issue or placement or something else may be coming soon…

 

 

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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