After successfully registering its prospectus for the forthcoming IPO, PropNex Realty the leading real estate brokerage in Singapore has clarified certain questions/doubts about some of the numbers mentioned in the prospectus.
On Monday, the company announced that its prospectus has been successfully registered for a 2nd July listing on the main board at a price of S$0.65 per share.
The company’s IPO of 42.5 million shares comprises of 2 parts, with 40.375 million set aside towards placement shares and 2.125 million shares towards the public offer.
Ismail Gafoor, the CEO and executive Chairman of the company on Monday, responded to a story carried in the local media on 21st June.
The media report had pointed to S$5 million as the aggregate consideration shown in the prospectus for transferring the 845 salespersons from DWR to PropNex, though Mr. Ismail had taken the ‘no numbers’ approach at the time the deal was made public last year.
Responding to this, on Monday, Mr. Ismail stated that the eventual consideration was finalised only on 29th November when the agreement for business takeover was signed.
He added further that on the day of the press conference, only an MOU was entered into between DWR and PropNex Realty setting out the intention, understanding and the in-principle agreement for DWR to extend assistance in transferring salespersons from DWR to PropNex, among other details.
He also stated that neither he, nor the company had indicated that the transfer of salespersons from DWR would be without a consideration.
Articles in the media had also drawn attention to differences in the disclosures in the prospectus relating to profit and revenue of PropNex for the 2016 fiscal and higher figures that were given to the press previously.
Mr. Ismail clarified that those figures were announced prior to consolidation of the Group’s business entities in the run-up to the proposed IPO. He also stated that the Group’s combined financial statements were audited by KPMG, as independent auditors.
With the present move to become a listed company, PropNex Realty the largest among homegrown real estate agencies will only grow bigger and have a market capitalisation of S$240.5 million based on its enlarged capital of 370 million shares.
PropNex Singapore is also selling another 50 million shares at the IPO price to Affin Hwang Asset Management Berhad, Nikko Asset Management Asia Ltd. Samsung Asset Management (HK), Limited, Income Insurance Co-operative Ltd, FIL Investment Management (HK) Ltd, and Value Partners (HK) Ltd.
UOB Kay Hian has been designated as the sole underwriter, issue manager and placement agent. The public offer opens at 8pm on 25th June and closes on 28th June noon.
The Net Asset Value (NAV) of PropNex after the IPO will be 15.2 cents per share and the premium on the offer price stands at 328.8% of the NAV.
The IPO is slated to garner about S$38.0 million of which S$12 million is allocated to regional and local expansion through acquisitions and mergers, partnership and joint venture strategy.
About S$8.0 million has been set aside for developing real estate brokerage business and another S$7.0 million for expanding the range of PropNex’s business services and S$6.0 million for upgrading technology with S$5 million reserved for working capital.
PropNex is not offering a fixed dividend policy though it intends to distribute dividends of a minimum of 50% from profits from the date of listing till closure of its financial year for 2019.
Presently, PropNex Realty has 7,248 agents under its hood as per the head count dated 6th June, 2018 and according to its IPO prospects, it enjoys 42.7% market share of the residential primary market and 45.3% of the HDB residential resale market for Singapore.
Apart from real estate brokerage, PropNex also offers training, real estate consultancy and property management services.
The PropNex IPO comes right on the heels of APAC Realty who successfully raised S$58 million last year from its Singapore IPO. The real estate brokerage arm of APAC Realty is operated by ERA Realty Network which is a wholly owned subsidiary under the parent brand ERA.
On Monday, shares of APAC were quoting at S$0.83, well above the IPO price of 66 cents.
PropNex Realty the largest home-grown realty agency in Singapore gearing up for its IPO (Initial Public Offering). The agency is planning to raise S$40 million from the proposed IPO.
The agency is looking for a market capitalization in tune of S$250 million through this IPO as per a news report that appeared on Bloomberg last weekend.
Realty trackers in Singapore have been talking about this IPO for quite a while now and it would be a major step for the agency.
As per the current market estimates the listed entity would help the agency take its market capitalization just below the S$300 million mark.
Given the regulations they will need to offer minimum of 25% post-invitation equity in the hands of public by the end of the IPO process.
This IPO would also include PropNex International business which is the agency’s marketing arm where interestingly JLL another of Singapore’s leading property consultants has 20% stake.
Though PROPNEX hasn’t officially declared the date for the launch of the IPO market analysts feel that the same could happen within the next few days as the agency is targeting getting listed by the end of this month.
There have been speculations on the listing price but a broad consensus has emerged for a price range between 62 and 68 Singapore cents per share.
This isn’t the first time that PropNex has planned for an IPO as it had done so in 2010-2011 but the move was put on the backburner when the property market started cooling down and the company feared devaluation. Interestingly it was also the time when it had hired KPMG as its auditors which is one of the Big 4 audit firms in Singapore.
PropNex Realty is now the largest property broking agency in Singapore with a large sales team where the head count is in the tune of 7200 agents.
Its merger with Dennis Wee Group in 2017 has given it an edge over its rivals. The business has been going strong for the agency as it already has been hired as marketing agents for 20 major projects this year and the clientele cuts across developers.
In 2017 its agents were able to see though 56,000 sales which an impressive growth from 46,229 sales which in 2016.
This helped the agency double its profit after tax to S$8.7 million which is more than twice the profits of S$4.17 million earned in 2016.
The company saw its revenue increase by 47% during the same period to reach S$341.32 million.
PropNex International had an impressive 2017 where it increased its profit after tax by 149% to clock S$8.98 million while its revenue grew to S$115.32 million or 168% increase over the preceding year.
PropNex’s IPO comes at a time when APAC Realty Ltd successfully raised S$58 million while being listed and its price has surged 43% from its listing price.