Xyec Picks Singapore Over Japan for Historic IPO: Southeast Asia
Xyec Holdings Co. (XYEC), the first
Japanese company to debut only in Singapore, plans to expand its
information technology business in Southeast Asia through
acquisitions and by hiring local talent.
The company plans to raise a couple of million dollars in
an initial public offering and start trading on Singapore’s
Catalist board for smaller enterprises on Sept. 18, Chief
Executive Officer Manabu Kobayashi said. Tokyo-based Xyec is in
talks with two Singaporean companies in the information
technology industry about possible deals, he said, declining to
elaborate because the talks are private.
Xyec, which provides engineering and information technology
services such as software development to manufacturers including
a unit of Toyota Motor Corp., chose Singapore over Japan because
of Southeast Asia’s growth potential compared with declining
demand and shrinking population at home. It targets total sales
growth of more than 50 percent to 10 billion yen ($100 million)
in the next two years, with 10 percent of that total to come
from the region, Kobayashi said.
“We want to make Singapore the base of our Asean
expansion,” Kobayashi, 48, said in a telephone interview from
Tokyo last week, referring to the 10-member Association of
Southeast Asian Nations. “We want to increase our regional
presence and capture good talent that we may not be able to get
if we remained in Japan, given the size of our company.”
Xyec will be the first Japanese company to have the primary
exchange for trading of its shares in Singapore, according to
Kobayashi.
Regional Hub
“Listing abroad would lead to increased presence in the
region as well as credibility, making it easier for the company
to find staff,” Tamami Ota, a Tokyo-based economist at Daiwa
Institute of Research Ltd., said. “It would make it easier to
raise funds in the local currency as well.”
Singapore Exchange Ltd. (SGX), Southeast Asia’s biggest bourse,
has attracted foreign companies as it aspires to become the
region’s financial gateway. There were 302 non-Singaporean
companies traded on SGX out of 782 companies as of August and
nine of them were Japanese, according to SGX. All the other
Japanese companies are also listed in Japan.
Xyec, pronounced “Zeek,” chose Singapore over Japan
because of the attraction of raising funds from global investors
and globally consistent regulation of additional share sales,
which it might undertake for expansion, Kobayashi said. The
company plans to open an office in Singapore by the end of March
2014, which will become the headquarters for business in the
region outside Japan, he said.
Asean Growth
Companies around the world have announced deals of about
$72 billion of assets in Southeast Asia this year, according to
data compiled by Bloomberg, amid expectations for growth that
outpaces the rest of the world.
Asean consists of Indonesia, Thailand, Malaysia, Singapore,
Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam.
The International Monetary Fund forecast July 9 that Asean’s
developing nations would expand 5.6 percent in 2013, compared
with 0.6 percent contraction in the euro area.
Not all agree that listing overseas before your home market
is a wise tactic. Companies raised about $4.5 billion from IPOs
in Singapore this year, compared with about $8.1 billion
gathered in Japan IPOs, according to data compiled by Bloomberg.
“Listing requirements are famously strict in Japan, but if
you’re listed and want to expand overseas, there’s no reason to
drop your Tokyo listing,” Nicholas Smith, the Japan strategist
at CLSA Asia-Pacific Markets in Tokyo, said. “You don’t want to
lose your Japanese sticky capital: just do a follow-on offering
for overseas investors.”
Catalist Exchange
Xyec will be the first Japanese company to list on SGX’s
Catalist board, according to the bourse. Nomura Holdings Inc. (8604),
the nation’s biggest brokerage, Murata Manufacturing Co., a
supplier to Apple Inc. and Samsung Electronics Co., and
department store operator Isetan (Singapore) Ltd. are among
other Japanese companies traded on SGX’s mainboard.
To woo foreign companies to list in Singapore, the
Southeast Asian bourse introduced new rules in the past two
years to allow the listing of resource companies without an
earnings track record on both the Catalist and mainboard, as
well as dual-currency trading for stocks and exchange-traded
funds.
SGX posted a 43 percent jump in profit for the three-months
ended June, its best quarterly performance since the same
quarter of 2007, as stock volumes rebounded and derivatives
contracts climbed to a record.
Xyec is targeting Japanese companies that have expanded in
the region, including Vietnam, Myanmar and Thailand and seeking
to recruit staff in the Philippines, Vietnam and Myanmar,
Kobayashi said. While the company has focused on providing
services to the manufacturing industry, it’s now seeking to
expand into finance as well, he said.
“For survival today, we need to make sure to capture good
talent especially for a small-to-medium-sized company like us,”
Kobayashi said. “We had to branch out overseas quickly.
Singapore is becoming a hub for Asia, and we thought listing in
that country would earn us recognition.”
Source: Bloomberg
