Nanofilm Technologies International’s S$510m (US$382m) Singapore IPO showed the city’s stock market is open for the right candidates from beyond the real estate sector.
The deal added some welcome diversification to the Singapore Exchange, which has relied heavily on real estate investment trusts in recent years. It is Singapore’s biggest new listing from the technology sector since 2000 and the biggest without a trust structure since 2012.
Nanofilm’s decision to list in Singapore, having considered Hong Kong in the past, proved a smart one as the scarcity value pushed up its valuation and ensured sustained investor interest post-listing. The stock jumped 12% on debut on October 30 and continued to do well, closing the year at S$4.40 on December 28, up 70% from the IPO price of S$2.59.
In a Covid-hit world, with investors focused on technology and healthcare over traditional manufacturing businesses, Nanofilm successfully projected itself as a technology play rather than an industrial materials company. It uses nanotechnology to make coating materials for various products, including smartphones, medical devices and car parts.
The company’s business also fared well during the pandemic. It posted a net profit of S$18.5m for the first half of 2020, up 70% over the same period of 2019.
The IPO price translated to a 2021 EV/Ebitda multiple of 12 times, giving no IPO discount to global and regional advanced materials peers in the 10x–12x range.
The company timed the deal before the US presidential election to avoid any market volatility. Books closed on October 23 and trading started on October 30, four days before the November 3 vote.
That timetable also made it one of the quickest debuts on the SGX, completing kick-off to listing within four months compared with the average six months.
About 53% of the float was sold to 13 cornerstone investors including Singapore sovereign investor Temasek Holdings, which made its first-ever local IPO cornerstone investment. Others included Aberdeen Standard, AIA, Capital Research and Nikko Asset Management, underlining the broad appeal of a Singapore float.
The deal attracted strong demand from around 120 investors including international and regional long-only institutions, multi-strategy funds and high-net-worth investors. The placement tranche of the IPO was covered 23x and the public offer 30.6x. The top 20 accounts, including cornerstone investors, were allocated 80% of the institutional tranche.
Nanofilms plans to use the proceeds for capital expenditure on new machinery, research and development, and for general working capital.
Citigroup, Credit Suisse and OCBC Bank were joint global coordinators and bookrunners with CLSA.
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