iFast Corporation has raised $105 million via a placement of 14 million new ordinary shares to institutional and accredited investors, announced the wealth management FinTech platform on Jan 11.
The placement was oversubscribed with over $150 million in total subscription, more than double the initial base deal size of $75 million.
The issue price of $7.50 is at the top end of the placement’s price range of $7.30 to $7.50. This represents a discount of approximately 4.5% to the day end price of $7.85 on Jan 7 and a discount of approximately 7.4% to the volume weighted average price of $8.10 that same day.
The anchor investors of the placement include 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.
Lee subscribed a total of $51 million in the company’s shares. “As iFast's close partner in the application for the Malaysia digital banking licence, we share iFast's long term vision in building a global wealth management company that is focused on empowering investors with easily accessible online wealth management and banking services,” says Lee.
The company will use the proceeds to fund the proposed acquisition of BFC Bank Limited, announced on Jan 7, along with general corporate and working capital.
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“We are thankful that the investor community has shown confidence in our company’s placement," says Lim Chung Chun, chairman and CEO of iFast Corp. "The funds will be used for the proposed acquisition of the UK bank, which we believe to be a significant milestone in our company’s growth towards building a truly global wealth management business."
Additional funds that are raised from this placement exercise will be used for working capital purposes, adds Lim.
The Edge Singapore earlier announced the placement on Jan 10, and iFast's acquisition of BFC Bank on Jan 7.
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Last week, iFast announced that it had signed an agreement with its partner, Eagles Peak Holding Limited, to acquire BFC Bank from Bahrain-based BFC Group for some $45.9 million, with an additional injection amount of $27.5 million.
The Group will have an 85% stake in the UK bank. The proposed deal represents a price-to-book multiple of about 1.62 times.
BFC Bank is a fully licensed UK bank operating under the Financial Services Compensation Scheme, and is authorised by the Prudential Regulation Authority of the United Kingdom (PRA) and Financial Conduct Authority of the United Kingdom (FCA), said iFast in a Jan 7 press release.
BFC Bank reported a net loss of £2.2 million ($4.0 million) for 9M2021. Based on a net loss of approximately £1.9 million ($3.4 million), which is based on an 85% stake in BFC Bank for 9M2021, and the Group’s net profit of approximately $27.8 million for 9M2021, the net loss attributable to the assets acquired is approximately 12.4% of the Group’s net profit.
Analysts are split on the development. Citi Research analysts Tan Yong Hong and Robert Kong are recommending investors “sell” iFast, citing high risk due to share price volatility.
“The acquisition will be immediately dilutive to earnings per share (EPS), as BFC Bank is loss-making and fundraising via debt/capital raise is required,” write Tan and Kong in a Jan 8 note.
Other research houses view the acquisition more favourably. UBS Global Research analyst Aakash Rawat notes that iFast has nursed ambitions to attain a banking licence for several years now, following unsuccessful attempts in Singapore and Hong Kong.
“The UK bank acquisition can increase the chances of acquiring a banking licence in Asia in the medium term. Current plans to grow deposits at BFC leveraging the Asian customer base doesn’t suggest material impact on earnings in the near term.”
Shares in iFast closed at $7.85 on Jan 7, its previous trading day. iFast has requested to lift the trading halt on Jan 11.
Photo: Albert Chua / The Edge Singapore
