Sincap may get a new lease of life. On March 18, Sincap announced a reverse takeover (RTO) deal of Skylink Apac, a newly structured entity, to hold related commercial motor vehicle leasing, hire purchase financing and related maintenance service businesses for $42.3 million.
Skylink Group is led by Wesley Shen, his wife Grace Xue and his brother Johnson Shen. Wesley serves as CEO of Skylink Apac, while Johnson holds the title of COO. Grace is the sales director of Skylink Auto, a related entity of Skylink Group that deals with automotive trading and sales.
Skylink Auto is not part of Skylink Apac but instead parked under Skylink Group. As part of the RTO, Skylink Auto will not be included in the deal as it requires a different fundraising strategy. Hence, Xue will not hold any directorship or executive position in Skylink Apac after the RTO. Following its completion, she will not hold any directorship or executive role in Skylink Apac.
“While Skylink Auto is not part of the proposed acquisition, the overall Skylink Group eco-system (Skylink Apac and Skylink Auto) recorded combined revenue of approximately $95 million for FY2024 and continues to grow rapidly,” says Shen in an interview with The Edge Singapore.
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Shen, originally from Guangxi, China, moved to Singapore in 2003 to study. He secured a job as an aircraft maintenance engineer with SIA Engineering, but a career with this blue-chip company didn’t satisfy him. Six years later, at 30, the entrepreneurial bug bit. “It was time for me to think carefully about my career path and direction. I want to be a businessman. I want to be an entrepreneur. I want to achieve financial freedom,” he adds.
Before starting his own business, Shen deepened his knowledge of the business world. He joined Borneo Motors, the local distributor of both Toyota cars and Hino trucks, which he helped to sell. At the time, the Hino model was Singapore’s least popular commercial vehicle. Wesley recalls making countless cold calls, canvassing and facing repeated rejections. The experience was particularly challenging as his English was not as fluent back then, and his limited knowledge of local dialects made it harder to connect with some small- and medium-sized enterprises. “So, that’s right, it was very tough.”
Shen persevered, believing that “tough times don’t last, tough men do,” and seized the opportunity to refine his core knowledge and skills to succeed in the industry. “It’s adversity coaching,” he says.
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With years of sales experience behind him, Shen then joined Goldbell Group, Singapore’s largest player in the leasing and distribution of commercial and industrial vehicles, where he worked for around two years. At Goldbell, his fortunes changed as the government encouraged commercial vehicle owners to phase in newer, less polluting models. Not only did Wesley expand his network within the industry, but he also earned enough commission income to finally start his own business.
Shen established Skylink in 2017 as a one-man operation. The business begain with the trading and sales of commercial vehicles, which eventually made up Skylink Auto today. Initially specialising in Hino, which Wesley had previously sold exclusively, Skylink now offers a range of brands, including Sany, Isuzu and Volkswagen.
“I built a team, systems and brand and got a showroom office back then in Toh Guan. That year was good because of the macro market environment; the COE quota increased, and prices were lower. We booked revenue of nearly $30 million that year (for Skylink Group),” says Shen.
Building on this foundation, Wesley expanded into adjacent business areas. In 2018, he began with a small fleet of just 30 vehicles to enter the vehicle-leasing market, which became SkyLink Vehicle Rental. Today, the fleet has grown to over 1,200 vehicles, making it the third largest among motor vehicle-leasing companies in Singapore.
In addition, Skylink operates several in-house workshops to maintain, repair and extend the lifespan of its commercial fleet while ensuring safety standards are met. Through an entity called Skylink Engineering, the company also offers these services for all types of motor vehicles in Singapore. Another entity, Skylink Credit, complements the commercial vehicle-leasing business by providing customers with hire-purchase loans and motor vehicle financing. Skylink Apac was incorporated for the RTO to hold these three businesses: Skylink Vehicle Rental, Skylink Credit and Skylink Engineering.
Three-year expansion plans
To fund the $42.3 million RTO, Sincap will first pay a so-called base consideration of up to $28.3 million, comprising $27.5 million to be satisfied by the allotment and issue of about 122 million new shares of the company on a post-share consolidation basis to PM Capital at an issue price of 22.5 cents upon completion. The balance of $800,000 will be payable in cash on a date within 18 months from the date of completion.
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PM Capital, an investment holding company, has an issued and paid-up share capital of $2 million, held by Shen (56.5%), Xue (30%), Johnson (10%), and Leonard Teh (3.5%), Skylink Apac’s CFO.
There is also a deferred consideration of up to $14 million in the form of an earn-out that is dependent on Skylink Apac’s adjusted accumulated net profit after tax of not less than $7.3 million for FY2025 and FY2026 (financial year ends March 31).
Up to $12.5 million of the deferred consideration will be satisfied by the allotment and issue of about 55.6 million new shares on a post-consolidation basis at the issue price of 22.5 cents. The balance sum of $1.5 million will be payable in cash within 18 months from the date the deferred shares are issued.
In its latest FY2024 results, Skylink Apac recorded revenue of $14.6 million, an increase of 86.1% from $7.8 million a year ago. Net profit more than tripled to $2 million in FY2024 from $0.7 million in FY2023.
For the more recent 9MFY2025, Skylink Apac reported revenue and net profit of $18.6 million and $2.2 million, which accounted for close to 30% of the net profit target.
After the completion of the RTO, Skylink Apac plans to use its listing status to expand the company. This is intended for both organic and inorganic growth and digital transformation.
Shen says the company has a three-year plan to expand its fleet from over 1,200 to more than 3,000 vehicles. It also intends to increase its space, including workshop and office facilities, while expanding its sales force. The company is considering potential M&A opportunities to help achieve its target and may explore acquiring a loan portfolio to grow its credit business further.
He adds: “Tech changes a lot in a company. We plan to transform our business operating procedures and improve our ERP (enterprise resource planning) for improved internal efficiency and productivity. We also want to enhance our customer service through a digital platform.”
RTO deals can have a ‘win-win’ outcome
Numerous companies on the Singapore Exchange have ceased to function effectively due to business failures or corporate governance issues. A handful have avoided the ignominy of forced delisting by restructuring and transforming into new businesses under fresh shareholders and management, typically through reverse takeover (RTO) deals.
Teh Wing Kwan, known for his flair in RTO deals and regarded by some as an RTO savant, has played an instrumental role in Sinccap’s takeover of Skylink Auto. Before Sincap and Skylink, Teh’s most recent RTO deal involved the sale of Livingstone Health to Citicode. He also played a key role in the restructuring of several other listed companies, including Sapphire Corp and the Hong Kong-listed China Vanadium Titano-Magnetite Mining Company.
Teh will become a strategic investor in Skylink APAC through his investment in distressed Sincap upon completion of the RTO.
In 2022, Teh was approached by distressed Sincap’s then-sponsor to evaluate the potential of turning it around via an RTO deal. He entered into a binding heads of agreement (HOA) with Sincap and invested up to $2 million in a mix of new shares, working capital loans, support and investor guarantee provisions.
With this injection, Sincap could maintain a listing structure of sorts, as it could then bridge some working capital needs and address most of its key compliance issues. Following this, Teh helped to source and scope out a few potential RTO targets, and the deal with Skylink Auto was eventually secured.
“While the proposed RTO has not been completed yet, I believe my proposed investment has, to a larger extent, saved Sincap from being delisted,” says Teh.
“Frankly, I first shared with them that a listing exercise can be one of the most challenging corporate processes for business owners to deal with, but it can be a very fulfilling corporate milestone if Skylink Group has embarked on promising growth strategies, including potential M&As,” says Teh.
In Teh’s view, distressed listed companies face many financial and operational challenges. Some, like Sincap, have been suspended from trading, leaving shareholders in a state of uncertainty.
“In such a scenario, if commercial terms work, I would invest in and lead a listco’s turnaround plan, re-capitalise its base and diversify into something much bigger in scale for shareholders,” says Teh. “Small listcos embarking on such plans are likely to be labelled as ‘RTO’ in technical terms, though it is just another investment portfolio from my perspective.”
Embarking on an RTO would give the listcos a new lease of life, and for shareholders, that means not being left to languish. But Teh emphasises that this sort of deal requires a unique corporate experience to lead, having to find a target company whose business owners believe in their own value and corporate profiles can be enhanced through a backdoor listing. “Whether it is an RTO, the key commercial objective is to initiate and complete a win-win transaction for both parties,” says Teh.
