HSR to list on SGX via reverse takeover

The property firm’s owners will sell their entire stakeholding to Catalist-listed Wepco for $40m

PROPERTY agency HSR International Realtors said yesterday it plans to list on Singapore Exchange (SGX) through a reverse takeover (RTO).

Husband-and-wife team Patrick Liew and Kellie Lim, who own 100 per cent of HSR, will sell their entire stakeholding to Catalist-listed Wepco Ltd for $40 million.

Wepco now provides electroplating services to the electronics, automotive, aerospace and medical industries. But once the RTO is completed, it will focus on real estate.

The company is likely to be renamed and re-branded. It will also apply for a transfer from the Catalist board to the mainboard.

Established in 1981, HSR is one of the largest homegrown real estate agencies in Singapore, with more than 7,000 agents listed.

Last year, it had a 32 per cent share of the HDB resale market and 40 per cent of the private residential market, said chief executive Mr Liew, who will head the enlarged Wepco.

HSR reported a drop in 2008 net profit to $1.4 million, from $4.9 million in 2007.

The weaker property market caused revenue to fall to $55.2 million from $80.6 million.

Mr Liew intends to use HSR’s listed status to grow the company.

‘We see tremendous opportunities for growth in Singapore as well as regionally and globally,’ he said.

In particular, HSR is looking to partner other real estate firms in South-east Asia to break into more markets.

It has marketed property in Australia, New Zealand, Malaysia, Canada and the United States, but currently operates mainly in Singapore.

Being a listed company will boost HSR’s brand equity and give it more ways to tap the capital markets for growth, Mr Liew said.

Wepco will pay the $40 million to Mr Liew and Ms Lim by issuing 80 million new shares at 50 cents each.

The issue price represents a premium of about 117 per cent over Wepco’s closing price of 23 cents last Friday.

Upon completion of the acquisition, Mr Liew and Ms Lim will own 83 per cent of Wepco’s enlarged share capital.

Wepco said that in the past few years many of key customers have shifted their operations overseas, resulting in a substantial loss of revenue.

This, plus increased raw material prices and other operating costs, has had a substantial negative impact on profitability, Wepco said. ‘While the company continues to strive for high growth in its current business, the directors are of the opinion that in view of the challenging business climate in which the group operates, there is a need to look for other business opportunities to increase shareholders’ value,’ it said.

Wepco’s stock gained 10 cents to close at 33 cents yesterday.

Source: Business Times, 17 Nov 2009