Crowdfunding platform to offer short-term bonds from listed firms

SINGAPORE - Crowdfunding platform FundedHere plans to open its doors to Singapore listings to raise crowdfunding through short-term bonds.

This is the latest move by such new-fangled funding platforms to attract listed companies' businesses to a deepening private-funding market in this yield-starved environment.

In a media statement, FundedHere said each bond is expected to raise up to S$5 million. It has already put out an estimate of a coupon rate of about 9 per cent - paid quarterly - over a tenure of one to two years, for such bonds.

It will target minimum subscription of S$50,000 each from registered accredited investors on its platforms. This means a S$5 million issue should be filled by 100 investors.

These investors are deemed to be accredited because they are high-net worth individuals, with at least S$2 million in net personal assets (excluding their primary home), or S$300,000 in annual income.

FundedHere, which holds a capital markets services licence, said companies issuing their bonds would not be required to issue a prospectus.

The SGX-listed issuers must meet the following FundedHere criteria: they must be majority-owned by Singapore citizens; they must have positive net tangible assets; and they must not be on the SGX watchlist.

The bonds must each be backed by a corporate guarantee, and FundedHere is in discussions with an insurance agency to underwrite the bonds.

FundedHere is already in talks with a few Singapore-listed companies and expects to launch the first bond before the end of September this year. FundedHere's press statement highlighted two oil-and-gas companies - Jason Marine and Loyz Energy - with their senior executives saying the bonds are an alternative to equity fundraising at a time when share prices are low, and that the bookbuilding process is at a "reasonable cost".

The choice to hold bonds or equity in a listed company has particular impact in the event of a bankruptcy. A bond holder should have a priority claim on assets before shareholders, though senior debt holders - which hold debt typically backed against collateral - will be paid before junior debt holders, in a liquidation process.

FundedHere will charge the issuer an annualised fee of 1.5 per cent of the funds successfully raised.

It said many smaller listed companies in Singapore face challenges in secondary fund raising due to insufficient liquidity and current low share prices. "The listco (listed company) bonds will be an important extension of our licensed equity crowdfunding and crowdlending platform as listed companies can reach out to our pool of AIs (accredited investors), some whom seek higher yields," said FundedHere CEO Michael Tee in a statement.

In March, Catalist listing EpiCentre Holdings became the first in Singapore to raise at least S$1 million through the crowdfunding platform MoolahSense. The loss-making company raised debt for inventory purchases and general working capital, at an interest rate of more than 10 per cent. The debt will be repaid through the sale of merchandise, EpiCentre told the investors.

This article was first published on July 18, 2016.
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