Credit Bureau Asia IPO chalks up 15% premium on debut

Singapore

CREDIT Bureau Asia (CBA) on Thursday made a solid debut on the Singapore Exchange's (SGX) mainboard, closing at a 15 per cent premium to its initial public offering (IPO) price of S$0.93.

It ended the day at S$1.07, up S$0.14 after some 9.4 million shares changed hands. The stock had opened at S$1.15.

The credit and risk information solutions provider was among the most active counters in early trade. As at 9.09am, the counter was trading 0.87 per cent or S$0.01 higher at S$1.16, with some 3.7 million shares changing hands.

Kevin Koo, founder and executive chairman of CBA, said: "We are off to a good start . . . (the) performance is a reflection of the market's appreciation of our company and its resilient cash-generative business model."

The company on Wednesday evening announced that its public offering of 1.5 million shares had been subscribed 60.8 times, with "strong interest" for its 28.5 million placement shares from institutional and other investors.

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Separately, cornerstone investors Aberdeen Standard Investments (Asia), Affin Hwang Asset Management, Eastspring Investments (Singapore) and Tokyo Shoko Research had subscribed for a total of 28 million new shares, constituting a 12.2 per cent stake in the company after completion of the offering and the issuance of the cornerstone shares.

With a total of 230.39 million issued shares, based on the IPO price, CBA's market capitalisation is about S$214.3 million.

The net proceeds which the company has raised amount to S$23.6 million, of which it intends to use S$11.8 million for strategic investments, regional expansion and acquisitions. Another S$7.1 million will be used for organic growth initiatives such as product development and business development, while the rest has been allocated for general corporate and working capital purposes.

Of the timing of the listing, Stephen Innes, chief global market strategist at Axi, said: "One would have thought the timing would have been good for the CBA listing given the raft of personal credit defaults, but this might also be a double-edged sword given that there could be more regulatory oversight."

He added that this would come from "compassion reasons alone", following the "raft of job losses" as companies were forced to restructure due to the Covid-19 pandemic.

Given that the pandemic could potentially affect "typically good borrowers' ability" in meeting their credit payment cycle, this could hurt their current credit rating "for no fault of their own".

As such, the government and banks will need to overhaul their credit standards and create a new credit reporting system, which credit bureaus will then need to adapt reactively, thus adding more cost as they change their reporting methodologies in place of the new regulatory oversight, explained Mr Innes.

Nonetheless, Victor Lee, chief executive of CIMB Bank Singapore, is optimistic of CBA's outlook.

He said: "The company enjoys first-mover advantage and is the sole credit bureau in Cambodia and Myanmar. Latent population growth and a largely unbanked population is conducive to driving credit demand in these markets.

"This will provide growth opportunities for credit and risk information solutions, alongside the advancement of domestic financial markets and the banking system."

CIMB Bank Berhad, Singapore branch was the issue manager for the IPO.