Singapore-based equity and debt crowdfinance platform FundedHere will be the first crowdfunding platform in Singapore, if not the Asia Pacific (APAC), to aid corporations listed on the Singapore Exchange (SGX) raise funds via short-term bonds of up to S$5 million (US$3.71 million), with an annual coupon of approximately 9 per cent.
In a move aimed at enhance the liquidity available to firms on the Singapore bourse, FundedHere, which received its Capital Markets Services (CMS) license from the Monetary Authority of Singapore (MAS) on 18 March 2016, will let Mainboard-listed corporations crowdsource funds via these short-term bonds. These bonds will not require the issue of a prospectus, according to FundedHere.
The move comes at a time as the SGX is addressing concerns over Singapore potentially becoming an investment backwater, amidst rising regional competition and shrinking market capitalisations. It also complements the SGX’s move to consolidate corporate debt on a new platform.
Under this scheme, Only Accredited Investors (AIs) registered with FundedHere will be allowed to subscribe to the listed company (list) bonds. FundedHere has registered close to 1000 AIs – individuals with at least S$2.0 million (US$1.5 million) in net personal assets, excluding the primary residence, or S$300,000 (US$225,000) in annual income.
FundedHere has successfully helped several privately held companies raise short-term funds through licensed crowdlending, at an annual interest rate of about 18 per cent.
SGX-listed issuers must meet the following FundedHere criteria:majority owned by Singapore citizens; with positive Net Tangible Assets; and not on the SGX Watchlist. FundedHere believes that the introduction of Listco Bonds is timely, resolving the challenge of smaller listed companies in Singapore in fundraising, due to issues of insufficient liquidity and currently low share prices.
Once pre-qualified, the bond offering will be uploaded on its platform and available for subscription for 30 days. While the platform currently offers equity crowdfunding investment from as low as S$5,000 each, FundedHere is targeting minimum subscription of S$50,000 each from registered AIs for the Listco Bonds.
Speaking on the development, Joseph Foo, CEO of listed corporation Jason Marine Group, said, “Many smaller listed companies in Singapore face challenges in secondary fundraising. Liquidity is a major issue. Another is that the low share prices currently make it unattractive to issue new shares.”
“By being able to issue short-term bonds through crowdfunding, we can access a new source of funds without diluting existing shareholders. This will be viewed positively by many of my peers,” Foo added. Jason Marine Group recently invested in the naval analysis startup Sense Infosys via its investment arm Jason Venture.
According to a media release, FundedHere has commenced preliminary discussions with a few SGX-listed companies and expects to launch the first Listco Bond before the end of September 2016. FundedHere will also levy a fee amounting to 1.5 per cent of the funds successfully raised, on an annualised basis, with the aim of offering bonds with tenures of one to two years, with the annual coupon paid out on a quarterly basis.
The Listco Bonds must each be backed by a corporate guarantee, with FundedHere currently negotiating with an insurance agency to underwrite the listco bonds, which Tee described as a “an important extension of our licensed equity crowdfunding and crowdleoding platform” offering greater security due to the publicly listed nature of the companies, as compared to startup ventures.
Weighing in on the development, Jeffrey Pang, CEO of oil & gas firm Loyz Energy opined: “For smaller listed companies raising less sizeable sums from the capital market, the legal and professional costs can take up a significant component of the funds raised.”
“FundedHere provides a trusted platform that facilitates issuance of bonds of up to S$5.0 million at a reasonable cost through a well-managed process for both investors and issuers. This can be a viable option for fund-raising,” he added.