Listing in Hong Kong was a strategic decision: Alex Lau, Anacle Systems

Anacle Systems graphic. Credit: Anacle Systems

Anacle Systems, a Singapore-based technology enterprise, recently conducted its initial public offer (IPO) on Hong Kong’s Growth Enterprise Market. According to founder and chief executive Alex Lau, their IPO raised HKD74 million ($9.53 million) in proceeds as at 22 December 2016.

Incepted in 2006, the technology firm provides enterprise application software and energy management system across Singapore, Malaysia, Taiwan, Qatar, UAE, and other Asian countries. Its proprietary software products are Starlight, an energy management solution and Simplicity, an enterprise application software solution.

Forgoing the Singapore bourse, the company has set its eyes on the Greater China market and listed in Hong Kong, with the intent of eventually listing on the Mainboard of the Hong Kong Stock Exchange as it matures.

A recent Frost & Sullivan research report placed Anacle as the second largest provider of commercial property management software and the third largest provider of building energy management systems in the retrofit market in Singapore in 2015 in terms of revenue.

In an email communication with DEALSTREETASIA, Lau discusses their latest IPO, the possibility of a secondary listing in Singapore and their growth strategy.

Edited excerpts:

Is Anacle aiming for expansion via M&A or organic growth?

There are plans to acquire companies in our targeted markets i.e. Hong Kong and Middle East.  Acquisition of local companies will equip Anacle with a team with local knowledge as well as ready customer base and pipeline.  While we identify and conduct the necessary due diligence on potential acquisitions, we will also focus on increasing market share in our existing markets.

What challenges do you foresee expanding into the Chinese market? 

Our products are subject to different localisation requirements depending on the type of products and the locations where they are used.

For our proprietary commercial property management software Simplicity, the key requirements that affect localisation are (i) language, (ii) compliance with local accounting standards, and (iii) supports for local sales/value added tax rules.

Simplicity currently supports multiple languages in addition to English, including traditional and simplified Chinese. At present, the IFRS on which Simplicity financial management is designed is well adopted in the new markets which we plan to expand into, namely Hong Kong and the Middle East, with the exception of the PRC that adopts the PRC accounting standards, or China Generally Accepted Accounting Principles.

Notwithstanding this, we have experience in deploying the software in the PRC, and have not encountered localisation problems with the accounting standards and rules in the PRC.

For our one-stop energy management solution Starlight, the smart meters are certified to international standards (International Electrotechnical Commission or IEC), especially IEC 65032. IEC standards are recognised by almost all countries in the world, and the only standards adhered to by Singapore, Hong Kong and the Middle East.

Aside from product-related challenges, typical business risks accompanying expansion into new markets are challenges we expect to face. Our strategic decision to acquire local companies in Hong Kong or China will mitigate some of the inherent risks associated with expansion into new markets such as lack of presence in the new market, lack of skilled talent, lack of understanding of the local regulatory infrastructure.

What are your prospects for markets like Japan and South Korea?

For the next three years, our focus will be expanding into Hong Kong, China and the Middle East, besides growing our market share in our existing markets.  Currently we have channel partners who are working with us to distribute our products in countries such as South Korea.

In terms of strategic partnerships and alliances, who are your current partners and in which sector will you be seeking to establish more?

NEC and Schneider Electric count among our most important strategic partners whom we have excellent long-standing working partnership with. Besides business partners, we have also been working closely with government agencies such as Info-communications Media Development Authority of Singapore (IMDA).

Anacle is accredited by IMDA under the Accreditation@IMDA Program, which subjects companies to stringent criteria such as rigorous operations, financial and technical evaluations.  The accreditation not only attest to the quality and business sustainability of our products, but also gave us the added advantage as accredited companies are given priority consideration by Singapore government authorities in their procurement process.

Will Anacle be setting up JVs to enter new markets or establish subsidiaries?

For the target market expansion, the plan is to establish subsidiaries in line with our business plan to acquire local companies in targeted new markets.

Being a Singapore company, is a secondary listing on the SGX a possibility in the future as the company grows? 

We do not rule out the possibility of a secondary listing on SGX.  Listing on HKSE first was a strategic decision and the first step in our expansion plans. Hong Kong has long been identified as our next target market since 2013, with its access to China and similarity to Singapore in terms of geographical size, geopolitical environs, population, culture, industrial base (with commercial real estate being the dominant industry) and jurisdiction (both descended from British law).

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.