Trendlines surges to 10-month high after letter of intent for portfolio company

Singapore

SHARES of The Trendlines Group jumped to a 10-month high on Tuesday after the company said it received a non-binding letter of intent (LOI) for the acquisition of a portfolio company by an unnamed public corporation.

The counter hit an intraday high of 12.2 Singapore cents on Tuesday, up 24.5 per cent or 2.4 cents as at 1.46pm. The last time the startup incubator's shares closed near this level was on May 20, 2020.

Trendlines closed at 11.3 Singapore cents on Tuesday, up 15.3 per cent or 1.5 cents, with 101.4 million shares changing hands.

If a definitive agreement is signed and the acquisition is completed, Trendlines expects the deal to have a material positive impact on its net tangible assets per share and earnings per share for the financial year ending Dec 31, 2021.

Based on the LOI, Trendlines' minimum share of the sale proceeds to be received in cash is estimated to be about S$19 million.

However, the group said there is "no assurance" that the LOI will be executed, or that the sale of its portfolio company would take place. The Catalist-listed company will make a subsequent announcement in the event that the LOI or a definitive agreement is not entered into.

The non-binding LOI comes one day after Trendlines announced plans for a dual primary listing on Israel's Tel-Aviv Stock Exchange (TASE). If completed, this will be the first dual primary listing and offering between the Singapore and TASE markets, the company said in a bourse filing on Monday.

Trendlines, which is an Israeli incorporated company, had on March 31 submitted an application to the Israeli Securities Authority to publish a prospectus on TASE. The startup incubator is also in the middle of consulting with SGX on the proposed TASE listing and securities offer.

Steve Rhodes and Todd Dollinger, who share the chairman and chief executive roles of the company, said Tel-Aviv investors, through recent technology company IPOs, have indicated great interest in tech listings and early-stage investment platforms like Trendlines.

The company's IPO advisers believe the market situation is positive, as indicated by recent TASE activity. In recent months, there have been more than 40 IPOs on the Israeli bourse, Trendlines said separately on Monday.

As the stock markets in Singapore and Israel attract different investors, Trendlines said the dual listings will provide the company with access to two different equity markets.

Mr Rhodes and Mr Dollinger noted that Israeli investors know more about the TASE and Israeli companies than they do about Singapore-listed companies.

"This, alone, represents substantial opportunity to have greater visibility and easier trading for them, on an Israeli schedule," Mr Rhodes and Mr Dollinger said.

The duo expect the IPO to be at least 70 per cent subscribed by institutional investors as Israeli institutions "generally have very limited investments outside of Israel". Investments outside of Israel are "mostly on the US markets", they added.

Mr Rhodes and Mr Dollinger said that many US investors invest in TASE-traded shares and that it is very difficult for Americans to trade in Singapore. As such, the listing would give the company a large investor base.

The proposal for the dual-listing is subject to approvals from TASE, ISA, SGX and Trendlines' existing shareholders. The completion of the listing is also subject to market conditions.