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E-commerce startup Synagie prices IPO at S$0.27 to raise net proceeds of S$9.8m
HOMEGROWN e-commerce solutions provider Synagie Corp has priced its initial public offering (IPO) at S$0.27 per share, to raise net proceeds of S$9.8 million.
The IPO comprises a placement tranche of 39.2 million shares and a public offer of 3.8 million shares.
Synagie will be listed on the Catalist board of the Singapore Exchange, with a market cap of S$70.7 million immediately upon its debut.
The public offer closes at noon on August 6, with trading to commence at 9am on Aug 8. Synagie was founded by chief executive Clement Lee and executive director Olive Tai in 2014.
Mr Lee was the CEO of nightclub operator LifeBrandz from 2007 to 2009, and its executive chairman from 2009 to 2013. From 2013 to 2015, he was the CEO of Avenza, which sells weight-loss supplements.
Ms Tai was a trading director at Watsons Singapore from 2011 to 2014, and a former managing director of Avenza. Mr Lee’s sister, Zanetta Lee, is also an executive director.
Synagie’s cloud-based platform was launched in August 2016, and helps brand partners like Johnson & Johnson, Kimberly Clark and Shiseido distribute their products on online marketplaces.
The Synagie dashboard allows brand partners to monitor their orders and sales across the various online marketplaces like Lazada and Qoo10 in real time, and watch consumers’ buying patterns to manage inventory or adjust their marketing strategies.
For example, Synagie has found that households in District 19, which includes Punggol, Sengkang and Hougang, are the biggest buyers of baby products.
Mr Lee told The Business Times: “Amazon has very public analytics you can get with a plug-in. For most South-east Asian marketplaces, you can't get that without our platform.”
Synagie also enables basket analysis, Mr Lee said: “We are able to show you people who bought Listerine, they also bought Carefree Unscented. We use this to tell our brands, why don’t you do a bundle instead of cutting the price for both sides?”
Synagie made a net loss of S$3.4 million in 2017, widening from a net loss of S$2.3 million in 2016.
Revenue in 2017 jumped to S$8 million from S$3.7 million in 2016, as it added 77 new brand partners bringing the total to more than 250.
E-commerce revenue was S$7.2 million. Synagie sells goods on an outright purchase basis as well as on consignment. Last year, roughly 28 per cent of sales were done on a consignment basis, where margins are lower.
He said: “In hindsight we made a mistake in 2017, we were inclined on a cashflow basis to push for more consignment.
But certain brands that we already have three years of track record, we know how much they sell a year, we know how much they're growing, then the key decision is we should be optimising the margins and not go for a stockless model.”
E-logistics revenue was S$817,000 last year. Synagie offers on-demand warehousing and last mile delivery services by outsourcing the work to Ceva Logistics, SF Express and SimplyPost.
The products that Synagie markets are targeted for sale in Singapore and Malaysia. Singapore accounted for 99.9 per cent of e-commerce and e-logistics revenues last year, though Synagie has since set up operations in Malaysia at the end of last year.
On a pro forma basis, Synagie made a net loss of S$2.3 million, on revenue of S$12.3 million, after accounting for the new insurtech business acquired in April.
In April, Synagie acquired 1CARE Global for a cash consideration of S$3.3 million.
Insurtech for Synagie is basically an extended warranty business that Mr Lee hopes will help Synagie move into the electronics segment. Oppo is one new brand partner that came on board this year.
Synagie started out focusing on baby products, since baby products have the highest e-commerce penetration. It later branched out into the body and beauty segments.
At S$0.27 a share, Synagie is priced at 5.75 times sales based on the group’s pro forma 2017 results.
Mr Lee likens Synagie’s business to Baozun in China, albeit on a much smaller scale. Synagie’s rivals include aCommerce, Anchanto, DKSH, SCI Ecommerce, Singpost eCommerce, Y Ventures, Shopify and Shopmatic, according to Frost & Sullivan. Y Ventures was the first e-commerce startup to list here last year.
In the insurtech space, Synagie said its rivals include The Warranty Group and Brightstar Corp.
After the IPO, Mr Lee will own a 23.7 per cent stake in Synagie.
Ms Tai will own a 3 per cent stake, and Ms Lee 3.5 per cent. Mr Lee has agreed to a two-year full lock-up period on his shares, and a one-year lock-up period on half of his shares after that. Ms Lee has agreed to a one-year lock-up period.
Seed investor Centurion Private Equity, owned by David Loh and Han Seng Juan, will retain a 11.6 per cent stake.
Separately, 41.8 per cent of Synagie will be split among 24 other pre-IPO investors. These investors and Ms Tai have agreed to a six-month full lock-up period followed by a minimum six-month lock-up on half of their shares after that.
The IPO proceeds will be used for business expansion and working capital, Synagie said in its prospectus registered on Monday. This will include looking at how blockchain technology can be used to issue contracts and authenticate payments, and building up an invoice factoring service for small and medium-sized enterprises (SMEs).
Mr Lee said: “We are launching our SME acquisition plan very soon. The reason why we were originally focused on MNCs (multinationals) is only because they sell faster, their brands are more well-known.”
RHT Capital is the issue manager and sponsor. UOBKayHian is the underwriter and placement agent.