Are you preparing a roadshow, the conventional way of accessing public markets by selling shares? Are you using an investment bank to take care of the messaging, positioning and pricing of the deal?
This capital raising route typically means aiming for a listing on one stock exchange, which is typically in the home base of the company and the region out of which it scaled up. Foreign listings in the equity market have been mostly successful at a second stage (i.e. after successfully listing in the home origin market). All this is especially true for businesses that are B2C or B2B2C.
Pre-IPO pipeline wanting to be dressed as Fintech
We have covered the trend of declining IPOs in tech and in Fintech and the reasons companies choose to stay private for a prolonged period.
In our Daily Fintech global index, we have been tracking publicly traded incumbents and startups that qualify (based on our criteria) to have a strong Fintech component.
In this post, we are more interested in pre-IPO companies that are looking to and would desire to be seen as candidates in the Daily Fintech global index. We want to interpret their under-the-radar screen steps, even before they engage in a formal roadshow.
The Ayondo pre-IPO Fintech journey
Ayondo is a Swiss broker with headquarters in Germany, London and Singapore founded in 2008. Its customer base has grown to 200,000+ users in 195 countries with a heavy tilt towards social trading.
Ayondo was listed on Berne stock exchange under the name of Next Generation Finance Invest AG as an investment holding company in the early years. Ayondo has been accelerating its business positioning and offering. Its brokerage offering includes extra insurance in case of adverse conditions.
The company has an Asian footprint and has received funding from a Singapore-based private equity group Luminor Capital. Ayondo has entered into partnerships with KGI Fraser Securities, a Singaporean brokerage.
Since 2013, Ayondo has received three awards in the Fintech space. It has restructured its operational side to align with its changing strategic positioning.
Two facts caught my attention this month, the acquisition of Tradehero by Ayondo and the soon to-be-completed listing of Ayondo on the SGX via an RTO. Social trading has been around more than 5yrs and in What was your first impression with Social Trading?, the Fintech Genome community has been discussing about this vertical. Is Social trading, rather a form of Signal providing and Social analyzing; as per Filippo Ucchino of Investingoal? Is it simply to complement Charting tools, as Henry Schwab of TradeIt points out? Is it the digital trading floor to bread micro-managers, as I like to think of the potential of Social trading and as Marek Trepa of t-financials broadens the space, by including Motif investing?
The acquisition of Tradehero, a Singaporean Fintech mobile app for gamified trading, on the Ayondo platform gives a strong positioning to the company to tap into the beginner social trading market segment. It makes the training phase required on any social trading platform (e.g. eToro, Zulutrade etc) less intimidating and aims to reduce conversion time and rate (from a registered user to a paying user). Virtual trading and academy training on the Tradehero platform, increases customer engagement. The TradeHero weekly awards are one of the ways to award prizes.
An acquisition before listing however, doesn’t qualify as an alternative approach.
The first Social trading Fintech listing
Starland is a Singaporean property developer that will enter into an RTO with Ayondo. The consolidated group will carry Ayondo’s name. Starland will pay $157.5 million for Ayondo and this will be done through the issuance of new shares priced at 18.7 cents.
Reverse mergers are a cheap and fast way to get listed. RTO, reverse takeover offering, can be used if the regulatory environment allows it. Essentially, an active private company (like Ayondo) takes over a dormant public company (Starland).
Through this transactions the time to market and the costs are reduced to close to half or more. The consolidated Ayondo group will have a market capitalisation of S$210 million (US$155 million) with Ayondo shareholders owning 75 per cent of the new consolidated group. Ayondo gets an injection of new capital.
RTOs are a cheap and fast way to raise capital in the public markets, especially for small size companies that have a 2C type of business. It also allows the owners to maintain significant control of the company.
Will the RTO route become trendier in Singapore, as Western companies look for fast ways to tap into the large Asian market potential?
I researched the SGX RTO market for other Fintech or tech with social tilt type of deals. I found Yuuzoo a Singaporean social media firm that listed on SGX in 2014 via an RTO with W corp an electronic equipment manufacturer (market cap of RTO deal was around S$400mil; roughly double the Ayondo size but still small). Yuuzoo maintained 80% ownership through the RTO.
Will Zulutrade and eToro, accelerate plans to tap into the public markets? Both leaders in the social trading Fintech vertical, have been growing by broadening their product offering (from FX, CFDs, to indices, and equities). Rumors about an EToro IPO were floating around 2 years ago but have not revived recently.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech & operates the Fintech Genome P2P Knowledge Network. Efi Pylarinou is a Digital Wealth Management thought leader.