NTU's nanofilm spin-off may raise up to S$510m in IPO

Singapore

NANYANG Technological University's (NTU) spin-off company Nanofilm Technologies is heading for a mainboard listing on the Singapore Exchange with Temasek Holdings as a substantial shareholder.

A Reuters report cited three sources with knowledge of the matter that the initial public offering (IPO) could raise up to S$510 million, making it one of the largest non-Reit mainboard listings in recent years here. This would also be the first mainboard listing since March.

On Friday, Nanofilm lodged its preliminary prospectus. The company, which specialises in advanced materials and nanoproducts, was founded in 1999 by executive chairman Shi Xu when he was an associate professor at NTU's School of Electrical and Electronic Engineering.

Several parties have committed to go onboard as cornerstone investors including indirect wholly-owned Temasek subsidiary Venezio Investments, Nikko Asset Management Asia and JPMorgan Asset Management (Singapore) among others.

They have each entered into separate cornerstone agreements with the company or Dr Shi to subscribe for or purchase an aggregate of around 104 million cornerstone shares at the offer price.

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About 77.2 million of these shares will be new shares issued by the company while the remaining 27 million shares will be sold by Dr Shi.

Temasek will also become a substantial shareholder in the company following the completion of the offering and the sale of cornerstone shares.

This comes as Temasek's associates Vanda 1 Investments and Orchid 2 Investments, which are controlled by Heliconia, holds convertible notes in the company. The notes will be converted to shares prior to the listing.

Net proceeds from the issuance of new cornerstone shares will be used for the the development and building of new machinery as well as research and development and engineering in order to enter new end-industries and look into new areas in existing markets.

Proceeds will also be used for construction, refurbishment and renovation of new and existing production facilities; and general corporate and working capital purposes.

Nanofilm's core business units are advanced materials, nanofabrication and industrial equipment with operations in Singapore, China, Japan and Vietnam.

The company now provides unique solutions to some 300 customers across various industries including mobile phone, automobile and camera. Some key customers include Fuji Xerox, Nikon, Canon, Microsoft and Huawei.

For the first half of 2020, Nanofilm's net profit stood at S$18.5 million, up 62.3 per cent from S$11.4 million a year ago. Revenue for the half year climbed 40.9 per cent to S$77.8 million.

For the fiscal year 2019 ended Dec 31, net profit rose 22.2 per cent to S$35.8 million from S$29.3 million in 2018. Revenue also was also up 16.4 per cent to S$142.9 million.

The company currently does not have a dividend policy, and intends to utilise and/or re-invest any profits generated in the financial year ending Dec 31.

Other than the interim dividend of 1.9 Singapore cents per share paid out on July 2, it does not intend to pay out further dividends for FY2020.

The board, however, intends to recommend and distribute dividends of at least 20 per cent of net profit after tax (excluding exceptional items) generated in FY2021 to reward shareholders for participating in the group's growth.

The last mainboard listing in Singapore this year was the IPO of United Hampshire US Reit in March, which raised US$394 million.