We are towards the end of the first quarter of 2021, and there hasn’t been an IPO on the Singapore Exchange (SGX) yet. Compared to 2020, there were already five IPOs listed on the SGX within the first quarter.
Aztech Global, which is set to be listed on 12 March 2021, will break the duck – becoming first SGX IPO in 2021.
Here are 8 things you should know about Aztech Global before investing in it.
#1 What Does Aztech Global Do?
Aztech Global states that it is “a key technology enabler for the connected world tomorrow”. Its key products are 1) IoT devices and Data-communications products; 2) LED lighting products; and 3) other electrical products.
It also provides “one-stop design and manufacturing services to blue chip customers, technology start-ups and other companies with innovative products”.
According to its prospectus, Aztech Global has over 290 customers from more than 40 countries worldwide. Close to 60% of its revenue is derived from North America, while Europe comprises close to a third and the remaining 7% from other sources such as Taiwan, Japan and South Korea.
It has three manufacturing facilities, located in Dongguan, China and Johor, Malaysia. Aztech Global also has four R&D centres in Singapore, Hong Kong and Shenzhen and Dongguan in China.
#2 How Much Is Aztech Global Raising From The IPO?
Aztech Global is offering 68.12 million shares and $1.28 each.
A total of $297 million will be raised from the IPO.
After deducting underwriting and placement commissions, and the estimated expenses payable by Aztech Global but excluding any discretionary incentive fees, the estimated net proceeds is $283.7 million.
Out of this, $95.1 million will be due to the Aztech Group (which was the parent company of Aztech Global before the IPO). This means only approximately $188.6 million will be channelled to Aztech Global from the IPO.
#3 How Will The Funds Raised Be Used By Aztech Global?
As mentioned above, Aztech Global will only see about $188.6 million out of the $297 million raised.
| Use of proceeds | |
| Expansion and enhancement of our manufacturing facilities | $50 million |
| Expansion of our business through, inter alia, investments, mergers and acquisitions, joint ventures and/or strategic collaboration | $50 million |
| Enhancement of our R&D capabilities | $15 million |
| Increase sales and marketing channels for overseas markets expansion | $10 million |
| Expansion of ODM/JDM business to capitalise on opportunities in growing IoT market | $5 million |
| Working capital | $58.6 million |
#4 There are 18 Cornerstone Investors
There are 18 cornerstone investors in this IPO. An aggregate of 163,880,000 shares are to be issued and/or sold to these cornerstone investors.
More than a handful of the cornerstone names are instantly recognisable.
- Affin Hwang Asset Management Berhad
- AIA Bhd.
- AIA Investment Management Private Limited
- DBS Bank Ltd (acting on behalf of certina of its wealth management clients)
- Eastspring Investments (Singapore) Limited
- Employees Provident Fund Board
- FIL Investment Management (Hong Kong) Limited
- Hong Leong Assurance Berhad
- HSBC Global Asset Management (Hong Kong) Limited
- ICH Capital pte Ltd
- JPMorgan Asset Management Singapore Limited
- Lion Global Investors Limited
- Magna New Frontiers Fund
- OAKS Emerging and Frontier Opportunities Fund and OAKS Smaller Emerging Market Opporunities Fund (which are funds advised by Fiera Capital Corporation)
- Matthews International Capital Management, LLC
- New Silk Road Investment Pte. Ltd.
- Tokio Marine Life Insurance Singapore Ltd.
- UOB Kay Hian Private Limited (on behalf of certain corporate clients)
- Value Partners Hong Kong Limited
#5 Why Should Investors Be Interested In The Aztech Global IPO?
According to Aztech Global’s IPO, there are seven key investment highlights investors should note:
i. Committed and highly experienced founder and management team with deep insights into the electronics industry and instrumental in building brand and reputation globally
ii. Established reputation and solid track record over 30 years in the electronics industry and over 25 years in communication and networking technology
iii. Strong core competencies of in-house R&D and production engineering capabilities that differentiate us from competitors
iv. Strong manufacturing capabilities at diversified and highly integrated facilities in China and Malaysia
v. Key technology enabler to our customers, including multinational blue chip corporations, with our strong suite of core technological competencies
vi. Robust product portfolio catering to fast growing IoT, Data communications and LED lighting industries
vii. Globally diversified sales strategy with products sold and marketed various channels
Furthermore, Aztech Global has depicted “strong and accelerating growth” in revenue, which has risen from $377.2 million in FY2017 to $428.8 million in FY2019. However, revenue has declined in the first 9 months of FY2020, compared to FY2019 due to COVID-19 disruptions.
Source: Aztech Global prospectus
Similarly, profit has also risen significantly to $64.3 million in FY2019 from $19.7 million in FY2017. Again, similarly, the first 9 months of FY2020 has seen profit decline due to COVID-19 disruptions.
Source: Aztech Global prospectus
#6 Aztech Global Was Actually Part Of Aztech Group, Which Was Delisted From The SGX In 2017
According to the Aztech Global prospectus, it was formed in 2008 as a holding company for Aztech Group’s electronics business. At the time, Aztech Group was a listed company on SGX.
When Aztech Group was delisted from the SGX in 2017, its market capitalisation was about $20.4 million. This is based on its third quarter 2016 financial announcement, indicating it had an 51 million ordinary shares, and that its delisting offer to investors was $0.42 per ordinary share.
One of its reasons for delisting was “no present need for access to Singapore capital market”.
Source: Aztech Global prospectus
At the time, a Straits Times article quoted the privatisation offer from Chairman of Aztech Group (and also Chairman and CEO of Aztech Global in the current IPO) Mr Michael Mun as “not-so-sweet”. The article is also quoted stating that both Mr Michael Mun and his son Jeremy Mun (who was an executive director of Aztech Group and also executive director and COO of the current Aztech Global IPO) not attending an investor meeting to discuss the offer.
The current Aztech Global IPO gives it a market capitalisation of $990.4 million.
Between 2017 to 2020, the growth in the company has been stellar, which retail investors who were exited back in 2017 could not enjoy unfortunately. During the time, Aztech Group (AGRP) had also exited most of its non-electronics businesses and focused on expanding its electronics business.
Source: Aztech Global prospectus
#7 In 2014, Aztech Group (Not Aztech Global) Had Acquired Kay Lee Roast Meat Joint For $4 Million
This really should not have been a significant point in this article, but it just so happens that Dollars And Sense had also covered this back in 2014.
Of course, as stated in the screenshot of the prospectus above, Aztech Group exited most of its non-electronics businesses – likely including Kay Lee.
Read Also: Is Kay Lee Roast Meat Joint Worth S$4 Million?
#8 How To Invest In Aztech Global Shares During Its IPO?
A total of 68.12 million shares will be offered at $1.28 each. Only 3.5 million, or about 5%, of the shares will be for retail investors, while the rest will be for placement.
For those interested to invest in Aztech Global’s IPO, you can invest via
- ATMs and internet banking websites of UOB, DBS and OCBC
- Mobile banking interfaces of UOB and DBS
- The “printed WHITE Public Offer Application Form”
Applications for this IPO has been open on 5 March, and will end on 10 March (Wednesday) at 12 noon.
| Opening Date and Time | 5 March 2021 at 9 a.m. |
| Closing Date and Time | 10 March 2021 at 12 noon |
| Commence trading | 12 March 2021 at 9 a.m. |
Read Also: Step-By-Step Guide To Subscribing To An IPO (Through Internet Banking)
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