Raising S$105m via placement of new shares to fund acquisition of BFC Bank

  • Placement of 14m new shares at S$7.50 per share to raise S$105m to fund acquisition of BFC Bank
  • Key anchor investor, its consortium partner in its application for a digital bank licence in Malaysia, to subscribe for close to 50% of total amount raised
  • Maintain BUY, TP: S$11.37. Though startup losses expected in 2022 and 2023, a digital bank can help to create a seamless Fintech ecosystem and to fast-track AUA growth

WHAT’S NEW

Placement of new shares to finance acquisition of BFC Bank. To fund the acquisition of the BFC Bank, iFAST has raised a total of S$105m via a placement of 14m new shares, higher than the initial base deal size of S$75m. The issue price of S$7.50 is also at the top end of the placement’s price range of S$7.30 to S$7.50, and it represents a discount of approximately 4.5% to the closing price of S$7.85 on 7 January 2022.

Key anchor investor to subscribe for close to 50% of total amount raised. The anchor investors of the placement include Mr Lee Thiam Wah, founder and major shareholder of 99 Speed Mart Sdn Bhd, one of the group’s Malaysian consortium partners in its application for a digital bank licence in Malaysia. Mr Lee subscribed a total of S$51m in the company’s shares.

Use of proceeds. About S$73.4m (c.70% of total amount raised) will be used to fund the total investment amount for the acquisition of the BFC bank. Please refer to our latest report, Adding digital bank to Fintech ecosystem for more details. The balance of the proceeds will be used for general corporate and working capital purposes.

Maintain BUY, TP: S$11.37. Though start-up losses are expected in 2022 and 2023, in the longer term, a digital bank would help iFAST to create a global seamless Fintech ecosystem and to fast-track AUA growth. Near-term growth is still expected to come from Asia, while the Hong Kong business is expected to leapfrog from 2024. Overall, iFAST is expected to see robust growth of 51%/3%/45% in FY21F/22F/23F, helped by contributions from the ePension division in Hong Kong.