iFashion to go on blogshop-shopping spree: Page 2 of 2
By Benjamin Cher April 22, 2016
The problem with IPOs
iFashion certainly has ambitious plans. First, it is to reach a combined group revenue of S$10 million to S$15 million (US$7.4 million to US$11.2 million).
The second, perhaps even more audacious, is to list on the Australian Securities Exchange (ASX) within six to 12 months.
“[Lau] Kin-Wai has a lot of experience with ASX,” says Goh (pic).
“He recently did an IPO (initial public offering) for a game company called iCandy, and has done IPOs for five other companies on ASX as well,” she declares.
Taking a company public requires many rounds of due diligence and restructuring, and that’s not even considering the need to hire a sponsor and underwriter, among others.
Then there are the vagaries of the market, and the higher level of corporate governance involved, as Malaysia’s e-payment company MOL Global learned the hard way when it recently announced it would be delisting from Nasdaq after about only 19 months on the US bourse.
Sources familiar with the ASX listing process have expressed doubts of a young startup like iFashion being able to list within a year, since so many factors need to be aligned perfectly.
To learn more, DNA reached out to Golden Gate Ventures partner Michael Lints, who says there is some hope because “ASX is putting more emphasis on getting startups listed.”
However, whether that is the best way for an early-stage startup to raise funds is still debatable, he adds, without referring specifically to iFashion.
All this “totally depends on the startup’s ability to raise money, the need for added value investors, and, of course, the stage the company is in,” says Lints.
Furthermore, listing requires restructuring the company and includes a host of fees – and there is no guarantee of a listing at the end of that long, drawn-out process.
“Listing a startup on any stock exchange changes the dynamics in the company, and startups should be aware of that,” Lints cautions.
“The company becomes part of the public domain, which means more reporting and more financial transparency – it will be difficult for startups, for instance, to operate in ‘stealth mode.’
“Typically a startup will get a sponsor or investment bank to help with the roadshow once it decides to plan for an IPO, and the cost for the roadshow can easily go up to US$1 million, with the outcome uncertain,” he adds.
In the wake of the Alibaba-Lazada deal, Lints believes that more strategic buyers will look at South-East Asia as one of their expanding markets, noting that one way of entering a market is by acquiring a local player.
However, whether that will whet the appetite for IPOs remains to be seen, Lints cautions.
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