MyRepublic delays Hong Kong IPO again, blames hold-up in investor funds

Singapore

BROADBAND operator MyRepublic will file for its initial public offering (IPO) in July or August next year, and aims to go public in Hong Kong by end-2020, chief executive Malcolm Rodrigues told The Business Times.

That timeline marks yet another market delay at eight-year-old MyRepublic, which earlier pushed back its debut from late-2018 to mid-2020.

Growth plans were partly held up by a fund-raising shortfall, said Mr Rodrigues, citing a disputed injection by a Singapore private equity firm.

But he added that MyRepublic, which branched out into mobile services here in May last year, has made up the missing investment amount with others, and is on track to turn a profit by the IPO date, as planned.

Fund manager Makara Capital Partners pledged S$70 million at a joint press conference in late-2017, for a 12 per cent stake in MyRepublic.

But, besides Cayman Islands holding company MyRepublic Holdings Ltd, MyRepublic's other shareholders are units of Indonesian conglomerate Sinar Mas, and French telecom tycoon Xavier Niel's NJJ Capital, according to financial records as at June 30, 2018.

In the end, Makara never closed its investment, Mr Rodrigues told BT.

The sum was to have come through the Makara Innovation Fund, set up in 2017 in a tie-up with the Intellectual Property Office of Singapore (Ipos). The S$1 billion fund had a mandate to invest in 10 to 15 tech companies.

"There was a deadline for them to put the money in. They never did, I'm not sure why," noted Mr Rodrigues.

When approached by BT, Makara Capital CEO Ali Ijaz Ahmad, who sits on the Ipos board, said in an e-mail that "we do not comment on investments (whether ongoing or exits)".

Meanwhile, an Ipos spokesperson said neither the public agency nor its IP ValueLab business engagement unit take part in the Makara Innovation Fund's investment decisions.

The evaporated equity stake "hindered us", Mr Rodrigues said on Monday. "We had to kind of slow down growth... I would say it's taken up until just recently for us to actually say, okay, we're recovering."

But the dust-up is now water under the bridge. MyRepublic chief corporate development officer Gregory Mittman said. "Makara's been made up" by other investors, including a US$35 million loan from Hong Kong investment group CLSA, which MyRepublic has tapped to advise its IPO.

Mr Rodrigues added that, after raising about S$120 million in equity, MyRepublic switched to convertible debt from CLSA and others: "Once we get to listing, a big chunk of it will convert into equity, but, for now, we have to carry it on the balance sheet."

Most recently, a round in June brought funding to just under US$200 million; and "that gets us fully funded through next year, so we can do our IPO", Mr Rodrigues said.

While "we're on a path now where we don't need to raise any more money", he wants one last fund-raising hurrah, around January or February next year, to boost IPO valuation.

Mr Rodrigues had previously said that the Makara investment could have tripled his company's top line, which came in at S$54.9 million for the 12 months to June 30, 2018.

Asked how hefty the setback was, he said: "If we got the Makara money when we did, we'd have been growing aggressively for the last couple of years. It's taken us a year to make up for it... I think you'll start to see us grow again in the next few months."

An equity analyst told BT that bigger mobile virtual network operators (MVNOs) like Circles.Life and MyRepublic should not want for powder, as long as venture capitalists "keeping pumping money into the startups".

But the analyst, who asked not to be named, added: "How the smaller MVNOs will hold up is a different matter. Sentiment, not so much financials, would take some relief if one of the smaller MVNOs surrendered."