Dymon Asia to raise stake in Challenger to 14.9% for S$32.8m

CHALLENGER Technologies' 573 : 573 0%shares jumped on Wednesday (Oct 13) after it said Dymon Asia will spend S$32.8 million to raise its stake in the electronics retailer to 14.9 per cent from 1 per cent.

The move comes two years after a failed privatisation bid by Digileap Capital, a vehicle set up by Dymon and Challenger's controlling shareholders. In the new share deal, Digileap will subscribe for 56.6 million new shares at S$0.58 apiece.

The issue price represents a premium of 14 per cent to Challenger's volume-weighted average price of S$0.50 for trades done on Oct 12, the last full market day before the share subscription agreement was signed.

Shortly after the counter resumed trading on Wednesday afternoon, Challenger's shares advanced 12.9 per cent or S$0.065 to S$0.57 as at 1.33pm - just 1 cent shy of the share subscription price. Challenger's shares were trading 10.9 per cent or S$0.055 higher at S$0.56 as at 2.50pm.

The company had called for a trading halt on Wednesday morning before the market opened.

Challenger said it will use half of the net proceeds for strategic investments as well as mergers and acquisitions. The other half will be used for product and business development and business expansion.

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Other than injecting funds into the company, Dymon, a Singapore-based fund manager, will work with Challenger on its growth strategies, the latter added.

In June 2019, some 11.36 per cent of Challenger's minority shareholders blocked an attempt by Digileap to take the company private at S$0.56 apiece, valuing the company at S$183 million at the time.

More than 10 per cent of shareholders had rejected the delisting and the exit offer eventually lapsed. As the delisting did not proceed, the controlling shareholders sold their stake in Digileap to Dymon Asia.

Digileap is 70 per cent owned by the Loo family, and 30 per cent by Dymon Asia Private Equity. Four members of the Loo family - including Challenger chief executive officer Loo Leong Thye - and Ng Leong Hai, together held 78.64 per cent of the total shares at the time. Ng is Challenger's second-largest shareholder, according to the company's 2020 annual report.

Earlier this year, a Dymon Asia fund, together with Penguin International's chairman and managing director, made a S$0.65 per share offer to take the builder and operator of aluminium high-speed craft private.

The consortium had intended to delist Penguin if it acquired a stake of over 90 per cent, but it held only 80.05 per cent together with its concert parties when the offer closed.