High-margin financing business born from a crisis

FIRST Sponsor Group is not only the first Singapore-listed developer that disburses loans instead of borrowing, but it may also be the only developer with net cash post-IPO - "which is unheard of", said its CEO Neo Teck Pheng.

This has been made possible with the stunningly high-margin property financing business in China - one that the group stumbled upon following a crisis in 2008. The crisis stemmed from a fraud involving a Hainan hotel that it was acquiring, Mr Neo told BT.

Back then, First Sponsor was in the midst of acquiring Hotel Sofitel in Hainan with the help of a reputable Beijing law firm. Since it was a strata-titled hotel, the vendor - a developer - proposed selling the hotel in five tranches progressively to First Sponsor. But after First Sponsor completed the acquisition of the first tranche, the second tranche didn't come through.