Changing from court suit to C-suite

Singapore

COME Nov 11, Zico Holdings, a firm that rides on the brand of famed law firm Zaid Ibrahim & Co or Zico that began atop a bicycle shop in Kuala Lumpur in the late 1980s and built a respectful reach across Asean from its regional office in Singapore, will make its debut on Singapore Exchange's (SGX) Catalist.

It would have been an even more compelling story if the law firm was being listed, but the rules don't allow it - not yet at least. Most jurisdictions, including Singapore and except for Australia and the UK, bar non-lawyers from owning law firms, which also effectively rules out the flotation of law firms.

This soon-to-be-listed Zico Holdings, which aims to raise some S$14.4 million by offering 48 million new shares at 30 Singapore cents apiece, has nearly nothing to do with one of Malaysia's largest private law firms that is well-recognised in the region's corporate and legal circuit.

"It's going to be a challenge. I'm not discounting that fact (that many will associate Zico Holdings as a law firm) and so there'll be a transition but Zico is now more than just a law firm," says Zico Holdings managing director Chew Seng Kok, a veteran lawyer with nearly three decades of practice, who has advised on major privatisation deals in Malaysia and cross-border mergers and acquisitions.

Transition also awaits Mr Chew and his two other partners at the law firm - Zico Holdings executive directors Robert Liew and Kelvin Ng - who only just changed hats after bidding adieu to a collective 70 years of law practice, the last few spent providing other professional services, to answer their corporate calling.

"I wish I could do both but by law, I can't," adds Mr Chew who, in mid-October, unwound his 30 per cent equity interest in Zaid Ibrahim & Co to suit up for his new role as boss of Zico Holdings, a firm he will own 38 per cent of after the IPO.

Zaid Ibrahim & Co was founded by its namesake Mohd Zaid Ibrahim, Malaysia's vocal lawyer-turned-politician who has served both sides of the political divide - ruling Barisan Nasional's Umno and the opposition Pakatan Keadilan Rakyat - but didn't stay long with either one. Mr Zaid gave up all his interest in the law firm to Mr Chew back in 2008 when he was appointed as a Cabinet minister.

Now, Zico Holdings, an altogether separate entity, aims to woo investor dollars with a unique pitch - to put their money behind a firm which provides support services to legal firms and corporate, consulting, syariah and trust advisory and licensing services.

A tad dull maybe, compared with the fast-paced, adrenalin-fuelled world of legal corporate wheeling- and-dealing but apparently, it's big business which enjoys glee-inducing margins of between 50 and 60 per cent.

Zico Holdings made revenue of RM19.2 million (S$7.5 million) in the year ended December 2013, clocking in a compounded annual growth rate of 47 per cent over the past three years. It may be set to make a lot more this year with first-half unaudited revenue for 2014 coming in at RM17.6 million, more than double from the previous year's first half.

In 2013, the firm turned in a net profit of RM11.6 million and in the first half of 2014, it earned RM8 million, a near two-fold increase from the previous corresponding period.

Zico Holdings' topline contribution in 2011-2012 came from advisory and transactional services but since 2013, its management and support services business to legal firms under ZicoLaw network - this covers Australia and all Asean countries except for Philippines and Brunei - has been steadily raking up the numbers.

Simply put, law firms outsource their backroom nitty-gritty such as human resource and IT to Zico Holdings under a business agreement for a fee so they can concentrate on what they do best - lawyering. "We are lawyers and we understand what lawyers worry about," says Mr Chew.

It could also mean less capital expenditure for law firms as Zico Holdings, given the economies of scale, is better able to provide these backroom services in a cost-efficient way, he says.

Zico is Malaysia's homegrown brand but Mr Chew is keen to pitch its Asean flavour. "We are not (just) a Malaysian company. Zico is regional, we are an Asean company," he says, adding that the proceeds from the new listing will allow the firm to expand its operations and invest more in information technology.

It is for this reason that the firm has set its heart on floating on SGX, not Bursa Malaysia, to tap its reach as a regional gateway.

For now, some 60 per cent of its revenue comes from Malaysia but by next year, its largesse could be equally split with overseas operations.

"We have packaged Zico into a number of features that would be relevant for businesses going into Asean. We were in Asean before it became sexy. In this day and age, there's a premium to that," he adds.

Do good lawyers make good business people? "We have advised all the big firms in town. It's not alien to us. It's just that we are sitting on the other side now - advising ourselves," says Mr Chew.

"Shareholders are our clients now and we need to service them and make them happy," he says, in befitting lawyer-speak.