Oversea-Chinese Banking Corporation (OCBC) is the sole issue manager and global coordinator for this IPO. The bank, together with CGS International Securities Singapore (CGSI), are the joint bookrunners and underwriters.
Peter Lee, executive chairman and co-founder of Info-Tech, granted the IPO’s joint bookrunners and underwriters an over-allotment option exercisable by CGS International Securities Singapore to buy up to 4.9 million additional shares representing 19.7% of the total offer shares. He will continue to hold 29.3% of the company. However, if the over-allotment option is exercised, Lee’s stake drops to 27.4%. (The over-allotment option can only be exercised 30 days after listing.)
Separate from the offering, the IPO has nine cornerstone investors who have subscribed to 41.14 million shares. Of these shares, 27.35 million shares were newly issued by Info-Tech while 13.79 million shares were sold by Lee at 87 cents each. When asked why he sold his shares, on the sidelines of a media briefing, Lee says: “For personal reasons. I am still holding on to most of my shares.”
The cornerstone investors are Asdew Acquisitions, Avanda Investment Management, Dymon Asia Multi-Strategy Investment Master Fund (DAMSIMF), Ginkgo-AGT Global Growth Fund, Lion Global Investors, Maybank Asset Management, Nikko Asset Management Asia, Qilin Wealth Fund and Splendid Asia Macro Fund.
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Avanda Investments is the fund of former Singapore presidential candidate Ng Kok Song, and Qilin is the family office of Lim Chap Huat, executive chairman of Soilbuild.
The total deal size, including the offering and the issuance and sale of the Cornerstone Shares will raise gross proceeds of approximately $61.7 million (assuming that the over-allotment option is exercised).
As Info-Tech’s post-offering share capital will come up to 258 million shares at 87 cents each, the company’s market capitalisation will be around $224.5 million.
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The amount raised will be used for the research and development of new product lines and promotional activities. The amount will also go towards sales and marketing activities for the company’s existing markets and product lines.
The placement tranche was 5.5 times subscribed and the public offer was 14.4 times subscribed. Together, the two tranches were 7.3 times subscribed assuming the over-allotment option is not exercised.
Trading of Info-Tech’s shares is expected to commence on a “ready” basis at 9am on July 4.
Main product
Info-Tech’s main product line is a proprietary cloud-based one-stop HRMS (human resource management system) solution that helps organisations streamline their processes, improve efficiency and enhance workforce management. It comprises nine modules — Mobile Attendance, Time Attendance, Project Costing, Payroll, Leave Management, HR Software, Expense Claims, Performance Appraisal and E-Scheduling Software.
As at June 13, the Info-Tech HRMS, which accounts for 78.7% of Info-Tech’s revenue, has 850,000 active users in 23,000 organisations.
A second product, the Accounting Software, is fully integrated with the Info-Tech HRMS and allows for streamlined processes, improved data accuracy, and enhanced reporting capabilities. The HRMS has established a growing customer base of over 1,000 organisations.
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The group’s solutions are tailored for SMEs with the required scalability to accommodate fast-growing businesses.
During a media briefing on June 27, CEO and co-founder Dilip Babu said Info-Tech offers the most comprehensive solution because its HRMS comprises many modules. “We have a complete, comprehensive solution, providing first-class service to the customer. This makes customers sticky and happy. Our retention rate is 91%,” he says.
SME customers
Customers are mainly SMEs, some of which have headcounts as low as 40–50. The company’s HRMS customer acquisition rate is growing at 19% cagr over three years, Babu adds.
“As at December last year, we had a cash balance of $30 million, with a clean balance sheet and no loans. We have a dividend policy of a 50% payout ratio for the next two years,” Babu says. The prospectus states that the company will pay a dividend based on a 50% payout ratio for the period from the listing date which is July 4 to Dec 31. In FY2024, the company reported a net profit of $12.34 million.
“Customer service is very important. If the SMEs need help, they can call the support helpdesk. Once a customer is onboarded, two people are dedicated to supporting each customer. This means our support staff know our customers’ history and can resolve the problem,” Babu points out.
“As a Software-as-a-Service company, we operate an asset-light, people-driven company where functions like R&D and customer support are crucial,” he adds.
Info-Tech’s competitive advantage compared to the big boys, such as Salesforce, Oracle or SAP, is the low cost of its Info-Tech HRMS. SMEs can apply for the Productivity Solutions Grant to defray the cost of the HRMS in the first year by around 50%. In the second year, the charge is around $2 per employee per month. Hence, a SME with a 40–50 headcount would be paying just $80 to $100 a month.
This makes Info-Tech’s product much cheaper than some of the big boys who charge as much as US$500,000 ($636,644).
“The product is inexpensive for the user,” notes Charlie Chan, who manages Splendid Asia Macro Fund, which is one of the nine cornerstones for the IPO.
Since Info-Tech is a subscription-based service, subscriptions provide stable cash flows for the company. Nonetheless, Babu says the company’s growth has been fuelled by customer acquisitions. “Number one in our business model and the most important thing is customer acquisition,” he says. The company started in Singapore in 2007, and expanded its product distribution to Malaysia, India and later Hong Kong.
The company also moved its customer support to Malaysia and R&D to India to optimise its cost structure. “For revenue, Singapore is our largest and most dominant market, contributing 75% to 80% of total group revenue. The HRMS solution contributes 80% to group revenue,” Babu says.
As a small company, Info-Tech is a lot more nimble than the big boys. “Our products are comprehensive as compared to our competitors. Secondly, our after-sales service is first class, with dedicated support for customers. Number three, we are innovative. We always innovate, learn, improve, enhance our system,” Babu shares.
Info-Tech’s moat
Babu points out that SMEs comprise 95% of global companies, and in Singapore, they comprise more than 95%, while employing 70% of the local workforce. “This represents big potential,” he says, adding that SMEs are unlikely to opt for the global companies such as Salesforce, SAP or Oracle which are expensive.
SMEs cannot afford a Salesforce/SAP-type product, Babu figures. What SMEs need are simple, easy, user-friendly systems which comply with local regulations and policies, which can be rolled out swiftly (within a month) at an affordable price, according to Babu. Info-Tech’s HRMS does all these things.
“If you look at the global players, their systems need a lot of customisation, a lot of settings, and this requires a lot of time to implement. It could take from six months to a year. SMEs need a simple, easy, user-friendly system at an affordable price. [Ours] is plug-and-play with no need for customisation,” Babu says.
Babu came to Singapore in 2000, and found a job with Info-Tech’s executive chairman Peter Lee. “I joined Info-Tech. Peter was the boss and it was a three-man show. We were selling manual punch cards and DOS-based systems. Subsequently, we started working together and came up with new solutions and modules,” he recounts.
The duo co-founded the current iteration of Info-Tech in 2006. “From DOS, we converted our modules to be Windows-based which comprised a CD. We would ‘burn’ a CD, go to the customer’s place with the CD and install the software,” Babu recalls.
“When we transformed the system to a web-based one, we had to go to the customer’s server and install the system. In 2016, we launched a cloud model with three modules,” Babu continues. In 2017, Info-Tech added other modules.
The real growth started from 2016 because labour costs fell. For instance, the R&D team in India comprises 250 personnel. “Our labour cost has reduced. The functions, features, problem-solving — everything is done centrally,” Babu says.
Valuation
On valuation, Babu acknowledges he could have gotten better valuations on Nasdaq or even in Malaysia. “Our idea here is not only valuation. We wanted value for our company. We want our company to carry the Singapore brand which stands for stability, the rule of law, and sound regulation,” Babu says.
Like Salesforce, Info-Tech is likely to be an asset-light business, hence the focus is likely to be on EV/Ebitda, price-to-earnings (PER) ratio, the ability to generate both operating and free cash flow with a net present value attained from the discounted cash flow model.
As a comparison, Salesforce’s free cash flow has grown from US$2.8 billion in FY2019 to US$12.4 billion in FY2025 (the group has a March year-end). However, Salesforce’s weighted average cost of capital has risen in the past three years to a tad above 10% mainly because risk-free rates in the US were rising.
Based on the IPO price, and Info-Tech’s historic earnings per share of 4.8 cents, the historic PER on listing is likely to be around 18x. This compares with Salesforce’s and SAP’s forward PER both at 24x, and Oracle’s forward PER of 32x.
According to OCBC, the 87 cents IPO price was arrived at after the pre-marketing process, the cornerstone process, then, based on the book (as in book building), a price was agreed upon. Following the sale of the vendor shares, Babu will be the largest shareholder of the company with 41.4% of the shares.
Info-Tech is the first Mainboard IPO after Digital Core REIT in December 2021, and the first non-REIT IPO since Aztech Group in March 2021.
