<News Analysis> Onboarding Strategic Investors
- Issuing S$50m of 12-month maturity convertible bonds to EDB Investment (EDBI) and Alexandrian Worldwide (held by management team)
- Convertible to Yangzijiang (YZJ) shares (to be fulfilled by treasury shares) or redeemed at 12% premium
- Strategic investors and YZJ’s largest shareholders Mr Ren Yuanlin to moratorise Yangzijiang Finance (YZJF, the proposed Investment listing) shares for at least 6-month post listing to help stabilise share prices
- Another positive development on YZJF listing; reiterate BUY; TP S$2.15
Onboarding PE/VC arm of Singapore Economic Development Board (EDB). Yangzijiang has entered into agreement with EDBI and Alexandrian Worldwide Incorporated, to issue each investor S$25m convertible bonds with 12-month maturity. The bonds will be mandatorily converted into ordinary shares of YZJ upon authorities approvals as well as shareholders’ approval for proposed spin-off and listing at S$1.345/share (50-day VWAP). No dilution expected from the share issuance as YZJ will utilise the treasury shares bought back, which is more than sufficient at 60.7m shares currently.
EDBI is the private equity and venture capital arm of EDB. It helps to boost credibility having a government linked fund onboard. EDBI could also provide greater access to a wider pool of strategic investors to advance YZJ’s green technologies capability. As part of the collaboration with EDBI, Yangzijiang will set up maritime R&D hub in Singapore focusing on green vessels technology and autonomous vessels.
Alexandrian Worldwide is held by existing key management of YZJ.
At least 6-month lock-up period to ensure share price stability of YZJF. Strategic investors agree to moratorise their allotted shares in YZJF for 6-month post listing while largest shareholder, Mr Ren Yuanlin, who owns 21.8% stake in YZJ will also moratorise its allotted shares for 6 months and a further 6 months for 50% of shares. This is to provide greater stability of share price post listing and confidence to investors.
The proposed investment listing has made good progress thus far. We believe the successful spin off will unlock value and re-rate shipbuilding business. This shall drive share price closer to our TP of S$2.15. Reiterate BUY.