Its debut marks the Singapore Exchange&rsquo s first mainboard listing in nearly two years and second listing of 2025

 

[SINGAPORE] Software services provider Info-Tech Systems ended its first trading day at S$0.91 on Friday (Jul 4), 4.6 per cent above its initial public offering (IPO) price. 

 

The counter opened at S$0.95 with the stock code ITS, reaching as high as S$0.98 in Singapore&rsquo s second listing for 2025 and first mainboard listing in close to two years. 

 

The Singapore-headquartered firm&rsquo s trading debut comes two days after its IPO closed, with some 24.9 million shares fully subscribed at S$0.87 apiece.

 

Its IPO comprised an international placement of around 19.9 million shares allocated for selected investors, which was 5.5 times subscribed, and an offer of five million shares available to the Singapore public, which was 14.4 times subscribed.

 

This translates to a subscription rate of 7.3 times for all the shares on offer.

 

Established in 2007 by Babu Dilip, the company&rsquo s chief executive officer, and Peter Lee, the group&rsquo s executive chairman, Info-Tech Systems offers software services to improve the efficiency of human resource operations &ndash including payroll, leave management and performance appraisal &ndash and targets small and medium-sized enterprises.

 

The IPO proceeds will go towards deepening Info-Tech System&rsquo s market penetration, enhancing its brand visibility as well as expanding its suite of solutions and operations, said Babu. 

 

This could include expanding the group&rsquo s geographical presence to new markets and accelerating access to new technology through inorganic acquisitions and partnerships. The firm also operates in Malaysia, Hong Kong and India. 

 

For the financial year ended December 2024, the company recorded a 17.6 per cent rise in its net profit to S$12.3 million. Its top line grew by around 15 per cent year on year to S$43.7 million, tracking a rise in revenue of its cloud accounting software. 

 

OCBC is the sole issue manager and global coordinator for the placement, as well as the joint bookrunner and underwriter alongside CGS International Securities Singapore. 

 

The IPO comprised new shares issued and an offering of vendor shares by Lee and executive director Yeoh Sin Yee. 

 

Info-Tech Systems&rsquo mainboard listing follows that of automaker Vin&rsquo s Holdings : VIN 0% on the Catalist board on Apr 15. It is the first pure-play, software-as-a-service provider for human-resource management systems and accounting software to list on the Singapore Exchange.

 

Human resource management software firm Info-Tech offered 24.86 million shares at 87 cents apiece at its initial public offering (IPO).

 

Of the total amount of offering shares, 19.86 million were offered to selected investors outside the US, including institutional and other investors in Singapore under Regulation S of the US Securities Act 1933. The remaining five million shares went to the public.

 

Oversea-Chinese Banking Corporation (OCBC) is the sole issue manager and global coordinator for this IPO. The bank, together with CGS International Securities Singapore (CGSI), are the joint bookrunners and underwriters.

 

Peter Lee, executive chairman and co-founder of Info-Tech, granted the IPO&rsquo s joint bookrunners and underwriters an over-allotment option exercisable by CGS International Securities Singapore to buy up to 4.9 million additional shares representing 19.7% of the total offer shares. He will continue to hold 29.3% of the company. However, if the over-allotment option is exercised, Lee&rsquo s stake drops to 27.4%. (The over-allotment option can only be exercised 30 days after listing.)

 

Separate from the offering, the IPO has nine cornerstone investors who have subscribed to 41.14 million shares. Of these shares, 27.35 million shares were newly issued by Info-Tech while 13.79 million shares were sold by Lee at 87 cents each. When asked why he sold his shares, on the sidelines of a media briefing, Lee says: &ldquo For personal reasons. I am still holding on to most of my shares.&rdquo

 

The cornerstone investors are Asdew Acquisitions, Avanda Investment Management, Dymon Asia Multi-Strategy Investment Master Fund (DAMSIMF), Ginkgo-AGT Global Growth Fund, Lion Global Investors, Maybank Asset Management, Nikko Asset Management Asia, Qilin Wealth Fund and Splendid Asia Macro Fund.

 

Avanda Investments is the fund of former Singapore presidential candidate Ng Kok Song, and Qilin is the family office of Lim Chap Huat, executive chairman of Soilbuild.

 

The total deal size, including the offering and the issuance and sale of the Cornerstone Shares will raise gross proceeds of approximately $61.7 million (assuming that the over-allotment option is exercised).

 

As Info-Tech&rsquo s post-offering share capital will come up to 258 million shares at 87 cents each, the company&rsquo s market capitalisation will be around $224.5 million.

 

The amount raised will be used for the research and development of new product lines and promotional activities. The amount will also go towards sales and marketing activities for the company&rsquo s existing markets and product lines.

 

The placement tranche was 5.5 times subscribed and the public offer was 14.4 times subscribed. Together, the two tranches were 7.3 times subscribed assuming the over-allotment option is not exercised.

 

Trading of Info-Tech&rsquo s shares is expected to commence on a &ldquo ready&rdquo basis at 9am on July 4.

 

Main product

 

Info-Tech&rsquo s main product line is a proprietary cloud-based one-stop HRMS (human resource management system) solution that helps organisations streamline their processes, improve efficiency and enhance workforce management. It comprises nine modules &mdash Mobile Attendance, Time Attendance, Project Costing, Payroll, Leave Management, HR Software, Expense Claims, Performance Appraisal and E-Scheduling Software.

 

As at June 13, the Info-Tech HRMS, which accounts for 78.7% of Info-Tech&rsquo s revenue, has 850,000 active users in 23,000 organisations.

 

A second product, the Accounting Software, is fully integrated with the Info-Tech HRMS and allows for streamlined processes, improved data accuracy, and enhanced reporting capabilities. The HRMS has established a growing customer base of over 1,000 organisations.

 

The group&rsquo s solutions are tailored for SMEs with the required scalability to accommodate fast-growing businesses.

 

During a media briefing on June 27, CEO and co-founder Dilip Babu said Info-Tech offers the most comprehensive solution because its HRMS comprises many modules. &ldquo We have a complete, comprehensive solution, providing first-class service to the customer. This makes customers sticky and happy. Our retention rate is 91%,&rdquo he says.

 

SME customers

 

Customers are mainly SMEs, some of which have headcounts as low as 40&ndash 50. The company&rsquo s HRMS customer acquisition rate is growing at 19% cagr over three years, Babu adds.

 

&ldquo As at December last year, we had a cash balance of $30 million, with a clean balance sheet and no loans. We have a dividend policy of a 50% payout ratio for the next two years,&rdquo Babu says. The prospectus states that the company will pay a dividend based on a 50% payout ratio for the period from the listing date which is July 4 to Dec 31. In FY2024, the company reported a net profit of $12.34 million.

 

&ldquo Customer service is very important. If the SMEs need help, they can call the support helpdesk. Once a customer is onboarded, two people are dedicated to supporting each customer. This means our support staff know our customers&rsquo history and can resolve the problem,&rdquo Babu points out.

 

&ldquo As a Software-as-a-Service company, we operate an asset-light, people-driven company where functions like R& D and customer support are crucial,&rdquo he adds.

 

Info-Tech&rsquo s competitive advantage compared to the big boys, such as Salesforce, Oracle or SAP, is the low cost of its Info-Tech HRMS. SMEs can apply for the Productivity Solutions Grant to defray the cost of the HRMS in the first year by around 50%. In the second year, the charge is around $2 per employee per month. Hence, a SME with a 40&ndash 50 headcount would be paying just $80 to $100 a month.

 

This makes Info-Tech&rsquo s product much cheaper than some of the big boys who charge as much as US$500,000 ($636,644).

 

&ldquo The product is inexpensive for the user,&rdquo notes Charlie Chan, who manages Splendid Asia Macro Fund, which is one of the nine cornerstones for the IPO.

 

Since Info-Tech is a subscription-based service, subscriptions provide stable cash flows for the company. Nonetheless, Babu says the company&rsquo s growth has been fuelled by customer acquisitions. &ldquo Number one in our business model and the most important thing is customer acquisition,&rdquo he says. The company started in Singapore in 2007, and expanded its product distribution to Malaysia, India and later Hong Kong.

 

The company also moved its customer support to Malaysia and R& D to India to optimise its cost structure. &ldquo For revenue, Singapore is our largest and most dominant market, contributing 75% to 80% of total group revenue. The HRMS solution contributes 80% to group revenue,&rdquo Babu says.

 

As a small company, Info-Tech is a lot more nimble than the big boys. &ldquo Our products are comprehensive as compared to our competitors. Secondly, our after-sales service is first class, with dedicated support for customers. Number three, we are innovative. We always innovate, learn, improve, enhance our system,&rdquo Babu shares.

 

Info-Tech&rsquo s moat

 

Babu points out that SMEs comprise 95% of global companies, and in Singapore, they comprise more than 95%, while employing 70% of the local workforce. &ldquo This represents big potential,&rdquo he says, adding that SMEs are unlikely to opt for the global companies such as Salesforce, SAP or Oracle which are expensive.

 

SMEs cannot afford a Salesforce/SAP-type product, Babu figures. What SMEs need are simple, easy, user-friendly systems which comply with local regulations and policies, which can be rolled out swiftly (within a month) at an affordable price, according to Babu. Info-Tech&rsquo s HRMS does all these things.

 

&ldquo If you look at the global players, their systems need a lot of customisation, a lot of settings, and this requires a lot of time to implement. It could take from six months to a year. SMEs need a simple, easy, user-friendly system at an affordable price. [Ours] is plug-and-play with no need for customisation,&rdquo Babu says.

 

Babu came to Singapore in 2000, and found a job with Info-Tech&rsquo s executive chairman Peter Lee. &ldquo I joined Info-Tech. Peter was the boss and it was a three-man show. We were selling manual punch cards and DOS-based systems. Subsequently, we started working together and came up with new solutions and modules,&rdquo he recounts.

 

The duo co-founded the current iteration of Info-Tech in 2006. &ldquo From DOS, we converted our modules to be Windows-based which comprised a CD. We would &lsquo burn&rsquo a CD, go to the customer&rsquo s place with the CD and install the software,&rdquo Babu recalls.

 

&ldquo When we transformed the system to a web-based one, we had to go to the customer&rsquo s server and install the system. In 2016, we launched a cloud model with three modules,&rdquo Babu continues. In 2017, Info-Tech added other modules.

 

The real growth started from 2016 because labour costs fell. For instance, the R& D team in India comprises 250 personnel. &ldquo Our labour cost has reduced. The functions, features, problem-solving &mdash everything is done centrally,&rdquo Babu says.

 

Valuation

 

On valuation, Babu acknowledges he could have gotten better valuations on Nasdaq or even in Malaysia. &ldquo Our idea here is not only valuation. We wanted value for our company. We want our company to carry the Singapore brand which stands for stability, the rule of law, and sound regulation,&rdquo Babu says.

 

Like Salesforce, Info-Tech is likely to be an asset-light business, hence the focus is likely to be on EV/Ebitda, price-to-earnings (PER) ratio, the ability to generate both operating and free cash flow with a net present value attained from the discounted cash flow model.

 

As a comparison, Salesforce&rsquo s free cash flow has grown from US$2.8 billion in FY2019 to US$12.4 billion in FY2025 (the group has a March year-end). However, Salesforce&rsquo s weighted average cost of capital has risen in the past three years to a tad above 10% mainly because risk-free rates in the US were rising.

 

Based on the IPO price, and Info-Tech&rsquo s historic earnings per share of 4.8 cents, the historic PER on listing is likely to be around 18x. This compares with Salesforce&rsquo s and SAP&rsquo s forward PER both at 24x, and Oracle&rsquo s forward PER of 32x.

 

According to OCBC, the 87 cents IPO price was arrived at after the pre-marketing process, the cornerstone process, then, based on the book (as in book building), a price was agreed upon. Following the sale of the vendor shares, Babu will be the largest shareholder of the company with 41.4% of the shares.

 

Info-Tech is the first Mainboard IPO after Digital Core REIT in December 2021, and the first non-REIT IPO since Aztech Group in March 2021.

 

Human resource management software firm Info-Tech says that the total demand for its 24.86 million shares in its initial public offer (IPO) is about 7.3 times oversubscribed.

 

At the close of the offering at noon on July 2, there were 72,055,600 applications for the 5 million public shares, which is 14.4 times oversubscribed. Under the placement for international and local institutional investors, the 19,856,000 shares were 5.5 times oversubscribed.

 

The firm offered 24.86 million shares at 87 cents apiece at its IPO. At the same time as, but separate from, the offering, nine cornerstone investors including Asdew Acquisitions, Avanda Investment Management, Dymon Asia Multi-Strategy Investment Master Fund, GinkoAGT Global Growth Fund, Lion Global Investors, Maybank Asset Management Singapore, Nikko Asset Management Asia, Qilin Wealth Fund and Splendid Asia Macro Fund, have subscribed for or purchased an aggregate of $35.8 million.

 

The total deal size for the nine cornerstone investors will raise gross proceeds of about $61.7 million.

 

The listing and trading of Info-Tech&rsquo s shares on the mainboard of the SGX is expected to commence at 9am on Friday, July 4.

 

Oversea-Chinese Banking Corporation (OCBC) is the sole issue manager and global coordinator for this proposed IPO. The bank, together with CGS International Securities Singapore (CGSI), are the joint bookrunners and underwriters.

 

CEO and co-founder Babu Dilip said: &ldquo With the proceeds, we are well-positioned to advance our strategic priorities &mdash including broadening our suite of solutions and deepening our market penetration as well as strengthening our brand visibility in existing markets. We also intend to expand into new geographies as well as accelerate access to new technologies through inorganic acquisitions and partnerships. We believe these initiatives will propel the group into its next phase of sustainable growth.