SGX set to snag its first fintech listing through Ayondo's IPO

Brokers say the flotation will test Singapore investors' risk appetite for startups still in the red


AFTER a failed reverse takeover last year, European social-trading broker Ayondo Ltd is poised to be the first fintech company to list on the Catalist platform on the Singapore Exchange (SGX).

The Business Times understands that Ayondo, whose largest shareholder since 2014 has been Singapore private equity investor Luminor Capital, is seeking an initial public offering (IPO), which values the loss-making company at close to S$140 million.

The company, which will launch its pre-IPO roadshow soon, could list as early as next month.

Last April, Ayondo announced its intention to be listed in Singapore via a reverse-takeover (RTO) agreement. Plans were in place for it to be acquired by Catalist-listed developer Starland Holdings for S$157.5 million, but in October, the fintech firm announced that the RTO had fallen through after certain conditions in the sales purchase agreement could not be met.

The Frankfurt-based company's chief executive officer, Robert Lempka, said then that "the end of the RTO opens up the way for Ayondo to pursue an IPO instead. The preparation work for a RTO and for an IPO are almost identical in Singapore and therefore, provision is made for a listing in early 2018".

Ayondo is a pioneer in social trading, offering a brokerage platform that lets users copy the moves of top traders to optimise returns.

Brokers say its IPO will be a test of how much risk investors in Singapore are willing to take with fast-growing technology firms that seek high valuations before turning a profit.

Ayondo's success will be a boon for SGX and could pave the way for more fintech listings in Singapore, which is trying to move into the new economy, and help nascent companies in transition to raise funds for growth. Just last month, in a move to attract hot tech listings, the SGX said it would allow companies with controversial dual-class share structures to have their first, primary listing here.

Robson Lee, a partner at international law firm Gibson Dunn's Singapore office, previously told reporters that there has been an "Uber-isation" of financial platforms and that SGX would have to compete with fellow exchanges, private markets and other new technology platforms for new listings.

Several Singapore tech firms have opted to list in overseas markets, where they believe they can command higher valuations and find a larger pool of potential investors.

Ayondo was founded in 2008 by Mr Lempka, who was the chief executive officer of ABN AMRO Marketindex, and held trading management positions at Dresdner Kleinwort in Frankfurt and at Goldman Sachs International in London.

Its chairman and co-founder, Thomas Winkler, acted as chief executive of ABN AMRO Switzerland, and was the global head of Private Investor Products at ABN AMRO and worked for Goldman Sachs, London.

Last year, Ayondo received its portfolio management licence from German regulator BaFin; it is also regulated by the Financial Conduct Authority (FCA), a financial regulatory body in the United Kingdom.

In Singapore, Ayondo has teamed up with KGI Securities (Singapore) Pte Ltd to provide a platform for investors to trade Contracts for Difference or CFDs, tradeable derivative instruments based on specific underlying assets or market indexes.

Its Singapore operations, which include TradeHero, a developer of a popular investor-education application it acquired last year, are housed in its Singapore branch on Armenian Street, which opened in July 2014.

It plans to use the TradeHero brand to diversify its offering geographically - mainly in Asia - and by targeting a client universe that is intrinsically different from those clients onboarded via its existing products. The company has also signed an agreement with TradeHero China to target Chinese traders with a more simplified, casual trading product.

Ayondo cited a few reasons for choosing Singapore as its listing venue. Among the pull factors are the Monetary Authority of Singapore's push for fintech, its launch of a FinTech and Innovation Group and its pledge to spend S$225 million on the sector over five years.

The city-state also hosts the biggest annual fintech festival in the world.

In 2016, Ayondo posted a net loss of CHF 10.8 million, compared to a net loss of CHF 12.3 million in 2015. Revenue grew to CHF 18.9 million in 2016, from CHF 11.1 million in 2015. For the first seven months of 2017, Ayondo's net loss stood at CHF 7.0 million, on the back of CHF 14.7 million in turnover.

Since its inception, it has won 19 accolades, including a FinTech 50 award in 2013, the International Financial Award Best Social Trading Platform (UK), Broker of the Year (Germany) and Best Social Trading Network (UAE).