One Championship cites IPO plans after Temasek-linked directors resign

Singapore

THE resignation of two Temasek-linked directors from the board of One Championship comes amid the company's plans for a listing, its president Teh Hua Fung said on Monday evening, in response to media reports about the departures.

Earlier on Monday, The Business Times reported that Derek Lau, chief executive of Temasek unit Heliconia Capital Management and Fock Wai Hoong, a managing director at Temasek, recently resigned from the board of the Mixed Martial Arts (MMA) outfit, according to regulatory filings. The development was earlier reported by DealStreetAsia.

In a media statement, Mr Teh said: "As part of our plans for a public listing, we are taking a number of technical steps to ensure that we have the right governance structure in place for various jurisdictions, including the US."

He added that Temasek and Heliconia "remain fully engaged and supportive" of the company's direction.

Temasek declined to comment on queries from BT, but a spokesperson confirmed One Championship's statement. Heliconia declined to comment when reached by BT.

Mr Lau had joined One Championship's board back in 2016, after Heliconia invested in the company.

Mr Fock was added to the board in July last year. A month earlier, One Championship had announced a US$70 million fundraise, joined by existing investors Temasek and Sequoia. The company also simultaneously axed a fifth of its headcount.

Subsequently, in February, One Championship was reported to be mulling a US listing via a Special Purpose Acquisition Company (SPAC).

The startup was most recently valued at US$864 million, according to data platform VentureCap Insights.

In his Monday statement, Mr Teh said the company has appointed Goldman Sachs and Credit Suisse as financial advisers for a potential listing, alongside Skadden, Arps, Slate, Meagher & Flom as legal adviser.

Sentiment on One Championship's past financial performance and future prospects appears lukewarm.

A seasoned over-the-top content executive and investor told BT that One Championship's revenue-generating potential is not yet evident.

"It will have to be an extraordinary process to get to the public markets - whether through a SPAC merger or reverse takeover. The revenue traction has yet to reach a critical mass level," he said.

The company has also previously drawn criticism over the inclusion of a sizeable portion of non-cash barter revenue in its financial statements in regulatory filings.

One Championship faces a challenging business environment. Its live events business has been hit by Covid-19 restrictions. The company recently forayed into reality television, with its own version of The Apprentice.

Li Jianggan, chief executive of venture builder Momentum Works, said that One Championship has made some inroads in its reality television pursuit. But it may also need to have a tough conversation with investors about its valuation if further funding needs to be raised.

"It is still at an early stage and whether (reality television) can become a viable business model for One Championship remains to be tested," he said.

One Championship has been hit with deepening losses in recent years.

For FY2019 ended December, its Singapore-based entity Group One Holdings posted a net loss of S$129.5 million for 2019 ended December, 57.7 per cent steeper than from the previous year.

Revenue rose 66.8 per cent to S$62.4 million for the year. This was driven primarily by broadcasting revenue more than doubling year-on-year to S$45 million, while ticketing revenue similarly more than doubled to S$2.4 million.

However, its bottom line was hit mainly by steep costs. Marketing expenses rose 46.4 per cent to S$72.2 million, while administration and other expenses rose 47.9 per cent to S$61.5 million.

Cash burn was also significant, as the entity recorded S$136.6 million in net cash used in operations for 2019, more than 1.7 times the S$78.5 million figure from a year ago. The company had S$73.3 million in cash as at end-2019, down 61.3 per cent from a year ago.