As listed on its website, Trendlines has invested in around 60 companies and has exited from 10. Trendlines&rsquo income statements can vary widely from year to year, as it adjusts its fair value of these investments. However, for about five years, its share price has been stuck around 10 cents &mdash only to decline significantly since August 2023, after fighting in the Middle East escalated. Yet, from a recent low of just three cents, Trendlines&rsquo share price has since doubled, from early October to close at 6 cents on Oct 28, valuing the company at about $84 million.
Despite his company&rsquo s market value doubling, Trendlines CEO Haim Brosh believes his mission now is to bridge further the gap between what investors value his company and what he considers Trendlines&rsquo investments are worth.

In accordance with the International Financial Reporting Standards (IFRS), the book value as at Dec 31, 2024, was around US$67.3 million ($87 million). If a non-IFRS valuation is applied instead, the number should be US$120.4 million. &ldquo The reason for this big difference is due to the last transaction value of a start-up company versus what we put onto our books according to IFRS,&rdquo says Brosh in an interview with  The Edge Singapore.

Food dye, cocoa butter

Brosh, who was appointed CEO in 2023 after serving as CFO, is upbeat that several of the portfolio companies are ready for prime time. Phytolon, which focuses on a broad spectrum of healthy plant-based colours produced via fermentation technology, is set to redefine the global food dye industry, he claims. The catalyst is coming from the US, the world&rsquo s largest economy, as artificial food colouring is being phased out during food production and will soon be banned. &ldquo This is where the rest of the world will follow suit and Phytolon will stand to dominate the food dye industry,&rdquo says Brosh, adding that the global food dye industry is now worth around US$5 billion &mdash and growing.

&ldquo For Trendlines, we currently hold a 20% stake in Phytolon, and we cannot imagine how much our stake will be valued in the future. But, I will not quote the value of Phytolon or Trendlines&rsquo stake in the company as everyone can conduct their own evaluation and understand the potential for Phytolon,&rdquo he adds.

Another portfolio company flagged by Brosh is Celleste-Bio, described as an early-stage cocoa innovation company which recently achieved a breakthrough in sustainable cocoa production. Celleste-Bio, in which Trendlines holds more than 20%, recently produced the world&rsquo s first chocolate-grade cocoa butter using plant cell culture technology.

According to Mondelez, no other company in the world can produce cocoa butter of the quality comparable to Celleste-Bio. However, he qualifies that an exit plan for Celleste-Bio is still premature, as commercial-scale production is a few years away. &ldquo No doubt that the company is progressing well and possesses the ability to scale up, we prefer to wait for Celleste-Bio to become more mature before we look towards an exit for them,&rdquo he says.

Another promising investment is in PregnanTech, which focuses on preventing preterm birth. &ldquo Preterm birth is one of the most expensive medical treatments in the world. The cost of having a preterm child during the first year and beyond is huge. At PregnanTech, we had a solution for this medical problem, and the application is simple and easy to use. Again, this is a huge market in the medical space, and we hold a significant stake in the company,&rdquo Brosh says.

Peace deal

Headlines out of Israel and the wider Middle East region over the last couple of years have been on the long-running conflict in Gaza. The international community has been trying to get the parties involved to do a peace deal. Brosh maintains that the war affects individuals on a personal level. However, he claims that, on a business level, over the last two years, there has been no significant impact on Trendlines or its portfolio companies.

He points out that some employees of the portfolio companies have been called back to service, but Trendlines helped fill the gaps. &ldquo From the investment perspective, despite a minor pullback from investors due to the conflict, the vast majority of the investors continue to invest in our portfolio companies, and these companies were able to raise money as a whole without much disruption.&rdquo

&ldquo The potential ceasefire, according to many articles out there, is expected to give a big boost to Israel&rsquo s start-up industry. In fact, the Israeli government plans to allocate more funds to support these companies. We are hopeful that the ceasefire will be able to create great things for the country, for the people and for Trendlines&rsquo portfolio as well,&rdquo Brosh explains.

Potential exits and spinoffs

For Trendlines&rsquo investors, they are, of course, looking for the next exit. According to Borsh, there are now three or four companies in a good position, but he prefers not to name any at this point to ensure that Trendlines can negotiate a good exit offer for these potential candidates.

Shira Zimmerman, in charge of investor relations and corporate communications at Trendlines, explains that, across the portfolio, things can change dramatically from time to time. &ldquo Sometimes it could achieve a breakthrough, or there could be an exit offer on the table for certain companies without prior notice. These surprises come along as well, and therefore we prefer not to list down the companies within the portfolio that could potentially head for the exit in the near term,&rdquo she says. Nonetheless, she points out that over the 10 years since Trendlines was listed on the SGX, many of its portfolio companies have matured significantly, making exit deals more viable than they were five or six years ago.

Zimmerman also points out that the nature of these portfolio companies&rsquo businesses often means they face stricter regulations. &ldquo Unlike the mobile application or software sector that can commercialise and grow its users exponentially within six months to a year, our portfolio companies in the medical and agrifood industry need some sort of regulatory approval from government bodies such as the US Food and Drug Administration (FDA). The timeline to exit, therefore, is significantly longer,&rdquo she says.

Investments and fundraising

To make further investments or to maintain its stakes in the portfolio companies as they raise new funding, Trendlines recently raised nearly $8 million from a rights issue and a private placement at 2.85 cents and 3 cents, respectively. &ldquo We need the money to invest either directly or indirectly into our portfolio companies. We have great assets and great companies in our portfolio. We don&rsquo t want to be diluted too much during the fundraising period for our respective companies in the portfolio,&rdquo says Brosh.

&ldquo Therefore, we need the money to invest in our portfolio companies. And if I had more money, I would invest more in them. This is the heart and soul of our business. We need to keep funding these companies, and when the exit time comes, everyone, including our shareholders, will be able to witness the multiplication in our returns,&rdquo Brosh explains.

Given the valuation gap between Trendlines&rsquo market capitalisation and its portfolio valuation, Brosh admits that Trendlines will have to prove to investors that it can score a big exit at the end of the day.

&ldquo Once we prove that, we are confident that the market will appreciate us and give us the valuation that we should be getting. We are putting more effort into investor relations work these days. We are speaking to various current or potential shareholders across different regions, such as Singapore, the US and Europe, to explain to them the real value in Trendlines,&rdquo he says.

&ldquo At the same time, we are listening to our shareholders as well. We do not ignore them and we take their feedback and comments seriously. One issue shareholders stressed was our operating costs, and we are proud to say we reduced them by 60% from 2022 to 2025. Therefore, by listening to our shareholders, we would like to gain their trust and that will bring value to us as well,&rdquo Brosh says.