The fund will focus exclusively on Singapore&rsquo s SMEs, addressing the lack of large institutional capital in this space

 

[SINGAPORE] Yangzijiang Financial will be the anchor investor in a S$100 million fund by ICH Asset Management (ICHAM), which is led by the Singapore-listed company&rsquo s former chief executive, Vincent Toe.

 

The fund will focus exclusively on Singapore&rsquo s small and medium-sized enterprises (SMEs), and is expecting to start investing from September, Yangzijiang Financial announced in a Monday (Aug 18) bourse filing.

 

It did not specify the exact sum it would invest in the fund.

 

The initial pipeline of opportunities include companies in the technology, healthcare, sustainability and consumer-services sectors.

 

SMEs &ldquo form the backbone of the economy and, with the right capital and strategic support, harbour exceptional growth potential for investors&rdquo , said Yangzijiang Financial&rsquo s chief executive, Ren Yuanlin. 

 

&ldquo By anchoring this fund with ICHAM, we are signalling our long-term commitment to the local equity market and believe that Singapore offers a unique opportunity for investors who are prepared to take a focused and disciplined approach,&rdquo he added.

 

Toe, who is managing director of ICHAM, said that the strategy is to identify companies with clear growth trajectories and continue to support them in the public markets.

 

The fund will back SMEs from before they undergo an initial public offering, through to market entry and beyond, including strategic placements after listing. 

 

&ldquo This flexible strategy will enable both the group and ICHAM to capture value-accretive opportunities throughout the growth milestones,&rdquo said Yangzijiang Financial.

 

&ldquo By focusing on Singapore&rsquo s small to mid-cap segments, the (fund) endeavours to address the lack of large institutional capital and research coverage in this space, unlocking growth potential in an underserved area of the equity market,&rdquo it added.

The group has recently served as the key anchor investor in the initial public offerings of Lum Chang Creations, Info-Tech and Goodwill Entertainment, ushering in a much-needed burst of listing activity in the local market

 

[SINGAPORE] Vincent Toe, the former chief executive of Yangzijiang Financial, understands the challenges that companies with small-to-mid market capitalisation face when they attempt to get listed.

 

During his tenure at Yangzijiang Financial, Toe too faced an uphill task as the company&rsquo s shares underperformed, partly due to market conditions at the time. 

 

Reaching out to investors, particularly for non-index stocks, was difficult, he said.

 

Now, Toe &ndash as co-founder of local investment holding group ICH Group and managing director of its subsidiary ICH Asset Management, a Singapore-based fund management firm &ndash is betting on small to mid-cap stocks to drive growth on the Singapore Exchange (SGX).

 

&ldquo That is where the market opportunities are because these companies need a lot of attention, unlike the big ones,&rdquo Toe said in an interview with The Business Times.

 

He explained that small to mid-cap companies require significant handholding, from getting their internal processes in order to becoming familiar with listing requirements and engaging investors more closely, which helps to justify ICH&rsquo s role.

 

The group recently served as the key anchor investor in the initial public offerings (IPOs) of Lum Chang Creations, Info-Tech and Goodwill Entertainment, ushering in a much-needed burst of listing activity in the local market.

 

This direct investment is part of its broader strategy to channel capital into Singapore&rsquo s high-growth small- and mid-cap firms.

 

Since its founding in 2000, with early backing from EDB Singapore, ICH has invested in and advised more than 200 SGX-listed companies across sectors including technology, healthcare, sustainability and consumer services. The firm and its partners have deployed more than US$1 billion locally and internationally.

 

SGX has welcomed growing support from participants such as ICH Group as it rolls out initiatives to deepen liquidity and activity in the market.

 

&ldquo This all-hands-on-deck response reflects the shared commitment across the ecosystem to catalyse greater activity and deepen liquidity in our securities market,&rdquo said Koh Jin Hoe, head of capital markets, global sales and origination at SGX Group.

 

For Toe, the current market momentum echoes the opportunities and challenges he has seen over the years.

 

He has more than 25 years of experience across senior investment banking roles at UBS, DBS and JPMorgan, as well as a period as a fund manager at GEM. In addition, he has served as an independent non-executive director and chaired audit committees for several listed companies.

 

Longer-term view

ICH often takes the role of lead investor to help get IPO deals moving, said Toe. The company sometimes buys into a lead position as a show of goodwill, creating momentum for others who may be hesitant to commit until a lead is established. 

 

&ldquo Personally putting our name on it helps the market to go beyond,&rdquo he said, adding that the company is taking a longer-term view of certain companies.

 

By doing so, ICH provides an added layer of due diligence assurance, giving the market greater confidence. This creates both an endorsement effect and a leadership effect, particularly in situations where investor sentiment is cautious.

 

One of the most notable examples was Yangzijiang, which ICH Group supported in 2007 by providing equity and strategic advice, and helping the firm navigate the niche financing channels of the shipbuilding industry. 

 

Toe shared that during the financial crisis, the company&rsquo s shares were undervalued for a period, and ICH helped unlock value by supporting a dual listing in Taiwan, which boosted its market capitalisation by more than 30 per cent as Taiwanese investors recognised its true worth.

 

Toe explained that the market had undervalued Yangzijiang because of its financial business, with many investors assuming it was burdened by bad loans. To address this, ICH Group proposed separating the company&rsquo s businesses and played a pivotal role in the strategic spin-off of Yangzijiang Financial.

 

At that time, the combined entity was valued at about S$1.20 per share, but after the separation, the shares of the two entities together to-date traded at around S$4. This represented more than a threefold increase in market capitalisation, achieved largely by separating the businesses and allowing investors to better recognise the value of each.

 

Today, Yangzijiang Financial is proposing to spin off its maritime business, YZJ Maritime Development, for the same reason. This is due to investors&rsquo general dislike for conglomerates, Toe said. 

 

&ldquo What we have helped here is getting the right structure to market &ndash but we also support the company along the way by bringing in investors,&rdquo he added.

 

With the help of agencies, ICH connects companies with institutional investors through constant engagement, taking the lead by co-investing alongside them.

 

He noted that small and mid-cap firms eyeing a listing must secure sufficient funds not only to scale but also to cover listing expenses. Once these hurdles are cleared, they are in a much stronger position to go public.

 

Bull market

Toe believes that significant opportunities lie ahead for the local equities market.

 

&ldquo The Singapore market is undervalued as there is money to be made, and we will enter into a bull market soon,&rdquo he said, adding that it is the right time to take position. 

 

&ldquo We want to be a player in this market, to anchor good news, and take a longer-term deal,&rdquo he added.

 

By stepping in as an anchor investor, ICH aims to signal confidence to the market, Toe said. 

 

He hopes ICH can encourage other investors to participate in such deals. For example, in Goodwill Entertainment&rsquo s IPO, ICH&rsquo s involvement helped bring in two additional investors, allowing the deal to be completed quickly.

 

Toe noted that companies typically approach ICH through banks and underwriters. He emphasised that while the regulatory process in Singapore is relatively straightforward, the marketing process can be uncertain, especially for small-cap firms. 

 

This makes careful selection critical, as ICH&rsquo s primary objective is to generate returns by backing companies with strong potential.

 

&ldquo For small-cap companies, there is not much research coverage, making it difficult for investors to access information,&rdquo he said.

 

Looking ahead, ICH plans to continue anchoring upcoming IPOs. The immediate pipeline includes a company in the auto sector, expected in September, and another in the co-living sector, which should lodge its prospectus by this quarter. 

 

&ldquo Some are trying to rush for this year, but you will see a lot in the first quarter of next year,&rdquo Toe said, adding that a food manufacturer&rsquo s IPO could take place between this quarter and the next.

Dear Sirs,

 

I refer to the circular in relation to the above subject matter.

By now, I supposed you would have received numerous queries with regard to the mentioned 20% dilution.

It is of grave concern to all shareholders.  We need time to digest the explanation and decide on the most appropriate action to take.

Telling the rational of the dilution only at the EGM is definitely too rush and unfair to us. 

I believe many would prefer a clarification prior to the EGM.

Hence, an announcement before hand, would be greatly appreciated.

 

Best regards

 

a) Status of my holding: Individual

b) Full name: 

c) NRIC: 

d) Email address:

 

It is mentioned in the circular that, among other things, the proposed private share placement will dilute YZJF&rsquo s equity interest in YZJM by at least 20% or more. As a current YZJF shareholder, I am concerned that this would imply that a very steep discount would be given to the subscribers of placement shares, to the tune of even 50% of post spin YZJM&rsquo s NAV as follows: 

 

Placement with 20% dilution 

New shares issued: 3.52b x 20% / 1-20% = 880m placement shares

Placement amount : $250M

Implied placement price: 250M / 880m =0.284 per share. 

 

Even though the price discovery of YZJM will only be known upon listing post spin off, based on the information from the circular where it was stated that the Remaining Group&rsquo s NAV is expected to be $0.54 post spin, it is estimated that YZJM&rsquo s post spin NAV per share will be around $0.58 [$0.54 + $0.57 = $1.11 as per 1H25&rsquo s NAV]. The imply placement price of $0.284 seems detrimental to the existing shareholders. Accordingly, I would appreciate it that the company can quickly clarify the matter to all shareholders through appropriate channel of communications such as SGX announcement. 

 
As an existing shareholder, I can accept dilution in relation to private share placement and I am just seeking clarification, as from the circular, it also appears that the dilution is pertaining to YZJF&rsquo s equity interest becoming 0% post placement and distribution. Is the 20% dilution pertaining to only YZJF' s equity interest as it would hold 0% of YZJM post placement and spin off or applies to all existing shareholders?

 

Regards,