Investments gone bad

[LITTLEREDDOT]

SGX disciplinary committee raps Aspen, directors over Honeywell announcements​

The committee found that the company and its directors had failed to promptly disclose material information to its investors. PHOTO: ASPEN
Yong Jun Yuan

AUG 28, 2022

SINGAPORE (THE BUSINESS TIMES) - The Singapore Exchange's (SGX) listings disciplinary committee has reprimanded property developer Aspen (Group) Holdings for false and misleading statements it made about a purported deal to supply Honeywell International with gloves.
In a regulatory statement on Friday (Aug 26), the committee also reprimanded Aspen's chief executive and executive director Murly Manokharan, and two other executive directors: executive deputy chairman Nazir Ariff and group managing director Ir Anilarasu Amaranazan.
Mr Murly has to agree not to take any position in any other SGX-listed company for six months beginning July 20 this year. He also has to undergo a training programme on listing rule obligations. The two other executive directors will also have to undergo such a programme.
Aspen had on April 13 last year announced a US$210 million (S292.9 million) two-year master supply agreement (MSA) with multinational conglomerate Honeywell.
But this statement turned out to be false. At the time it was made, the company did not have any executed copy of the agreement or confirmation that it had been officially executed.
News of the agreement was picked up by the media, including The Straits Times and The Business Times.
Honeywell subsequently contacted Aspen to stop circulating the announcement and asked that the company retract press statements it had issued.

Instead of issuing a retraction on the SGXNet immediately, Aspen made attempts to ask media outlets to take down their articles about the announcement.
According to a statement by the committee, Aspen believed "once it removed the press releases in the media, it would then have clarity as to whether an agreement between Aspen and Honeywell would eventually be signed, and thus be able to make an appropriate announcement at that stage".
It was not till April 24 that the announcement was retracted.

Honeywell indicated on May 8 that it would not proceed with the MSA with Aspen.
While Aspen indicated that it accepted the decision to terminate negotiations on May 11 last year, it did not inform investors of the development in its business update on May 17. Instead, Aspen only said that it would update shareholders via SGXNet when there were any material developments.
It was only on June 4 last year, after further queries from SGX, that the company announced to investors that the deal was called off and the MSA was not consummated by Honeywell.
Aspen's shares later fell 8.3 per cent between June 4 and 7, to 19 cents. This was also 23.3 per cent lower than its share price of 24.5 cents on April 13, when the initial MSA announcement was made.

In the committee's grounds for its decision, it laid out two charges against Aspen, Mr Murly, its executive directors and other relevant non-executive directors for not promptly disclosing that MSA negotiations had been officially terminated, and for failing to have in place adequate and effective systems of internal controls and risk management systems.
An additional charge of failing to promptly disclose the non-consummation of the MSA was laid on Aspen, Mr Murly and the executive directors.
Furthermore, the company and Mr Murly received a further charge for releasing the MSA announcement, which was non-factual, false and misleading.
Shares of Aspen fell 0.5 cent, or 9.8 per cent, to 4.6 cents on Friday, after the regulatory statement was released.

 

[LITTLEREDDOT]

Popular Thai YouTuber flees abroad after alleged $77 million forex scam​

Ms Natthamon Khongchak, better known as Nutty the YouTuber, defrauded over 6,000 victims. PHOTOS: NUTTY.SUCHATAA/INSTAGRAM

Aug 29, 2022

BANGKOK (THE NATION/ASIA NEWS NETWORK) - A popular Thai YouTuber who claimed to be a successful forex trader has reportedly fled abroad after allegedly cheating thousands of investors out of two billion baht (S$77 million).
Ms Natthamon Khongchak, better known as Nutty the YouTuber, defrauded over 6,000 victims, according to Phaisal Ruangrit, a lawyer who campaigns to help fraud victims.
Mr Phaisal said one victim had deposited about 18 baht million with her.
On Aug 24, the lawyer led some 30 people to file complaints against Ms Natthamon with the Economic Crime Suppression Division.
He said the YouTuber had used her popularity to lure victims with the promise of high returns in a short time.
Ms Natthamon's YouTube account, which is titled Nutty's Diary, has over 800,000 followers but the last clip was posted some five months ago.
She invited people to deposit money in her account, promising 25 per cent returns for three-month contracts, 30 per cent for six-month contracts and 35 per cent for 12-month contracts. She pledged to pay returns every month.


However, in April, her customers began complaining that they had not received the payments as promised.
In a May 25 Instagram post, Ms Natthamon said she had made a mistake in trading and lost all the money but promised to repay to her investors.

On June 24, she announced she was being sued in two cases and would not be able to repay other investors if she was jailed.
On Sunday (Aug 28), popular Facebook page Drama-addict posted that Ms Natthamon had fled abroad. It added that one of her alleged victims, identified only as Nok, had offered a reward of one million baht to anyone who could provide information that led to her arrest.
The page said it received information that Ms Natthamon had fled to Malaysia

 

[LITTLEREDDOT]

Jail for woman who tricked 18 investors into putting in $2.2m in her Ponzi scheme​

Osmond Chia

Aug 30, 2022

SINGAPORE - Lured by the promise of 5 per cent returns, 18 investors put in a total of $2.2 million into what turned out to be a Ponzi scheme.
Some had doubled down on their investment after they received repayments on their supposed returns - but these were just done by the perpetrator to create a false sense of security.
They lost up to $300,000 each, as Wan Lai Kuan, 34, never planned to come true on the deals. She instead used the money to fund her cafe business, pay off loans and to settle daily expenses for her mother and then boyfriend.
On Tuesday (Aug 30), Wan was jailed for five years and nine months after she pleaded guilty to six counts of cheating.
Another 12 cheating charges and one charge for running a fund management business without a valid licence were taken into consideration during sentencing.
The court heard that in 2014, Wan and two partners Chan Xuan Feng and Ang Shi Yi - set up Skycastle Capital LLP, a business dealing with fund management from forex trading for profit.
Wan's role was to conduct trading for clients, while Chan managed the firm and referred investors to Skycastle, said Deputy Public Prosecutor Lee Wei Liang.

For reasons not mentioned in court, both partners left the firm by June 2015. Chan continued to refer investors to Wan even after he left and was paid for it.
Since 2015, Wan reached out to old acquaintances, pitching an investment opportunity that promised a 5 per cent monthly return on their invested sum.
She received between $3,000 and $720,000 from each investor. In turn, some of them told others about the investment opportunity and referred them to Wan.

To create a false sense of security, she prepared written contracts and made several repayments to the investors to trick them into thinking they were receiving genuine investment returns.
This prompted some of them increase their investments, handing her more funds.
But none of this money came from genuine investment returns, said DPP Lee, adding that Wan never intended to manage the investment portfolios for her clients and had no intention of fulfilling her contracts.
Between March 2017 and October 2018, 10 investors lodged police reports against Skycastle over its failure to pay themtheir investment returns, prompting the police to investigate.
It was found that Wan cheated 18 investors into investing $2,219,000 through the Ponzi scheme. She had also spent the money on personal expenses.
She spent almost $1.2 million on personal expenses, such as to run her cafe, settle loans, and pay for the daily expenses of her mother and former boyfriend Marcus Seah Wei Liang.
Seeking between 70 months and 76 months' jail for Wan, the DPP said she had taken deliberate steps to prolong the scheme and lured investors to hand her more funds by luring them into a false sense of security.
He added that the repayments made cannot be regarded as restitution as they were made to induce more investments.
Chan was not aware of Wan's cheating, but was fined in April this year for illegally carrying on business at Skycastle without a licence, said DPP Lee.
Skycastle has since been renamed as ASDF LLP, to which Wan remains a partner to date, said the DPP.
Those found guilty of cheating can be jailed for up to 10 years and fined.

 

[LITTLEREDDOT]

Spate of delistings from SGX due to low liquidity and poor valuations, stakeholders say​

Some companies also cited poor market conditions as well as the high costs of staying listed as reasons to delist. PHOTO: BT FILE

Kang Wan Chern
Assistant Business Editor

SEP 14, 2022

SINGAPORE - Amid recession fears and liquidity drying up as interest rates rise, the local bourse has seen a spate of offers to privatise and delist several publicly traded companies, with three taking place just this week.
The delistings come at a time when trading volumes on the Singapore Exchange (SGX) have fallen, and experts said more are likely to follow.
In the first half of the year, total traded value in ordinary shares and trust units on SGX fell by 6 per cent to $308 billion year on year, according to the bourse.
On Wednesday, Indonesian water treatment operator Moya Holdings Asia announced a voluntary cash offer from major shareholder Tamaris Infrastructure.
This came barely a day after an investment vehicle owned by the top executives of Singapore Medical Group (SMG) launched an offer to take the company private.
Also on Tuesday, Memories (2022), an associate of Myanmar tycoon Serge Pun, sought the voluntary delisting of tourism company Memories Group as prospects for growth in Myanmar fade.
Earlier in the day, a $1.35 billion proposal by major shareholder Frasers Property to take Frasers Hospitality Trust private fell through after it narrowly missed the 75 per cent vote needed to pass the resolution.

Other notable delistings this year include those of property companies Roxy-Pacific and SingHaiyi Group, and steel specialist TTJ Holdings.
Some of the companies cited poor market conditions, and low valuations and trading liquidity on the SGX, as well as the high costs of staying listed as reasons to delist.
SMG chief executive Beng Teck Liang said the company's poor share price performance had constrained its ability to "execute inorganic growth initiatives and build upon its track record of growth through acquisitions". He added that delisting would enable SMG to be more aggressive in pursuing growth.


Mr S. Nallakaruppan, president of the Singapore Society of Remisiers, said: "Companies list either because they can get much better valuations as a publicly listed company, or because of the ease with which they can raise additional capital to advance growth prospects.
"If neither of these conditions is met, the listed company is better off being privatised, and that is what has been happening to the Singapore market over the past several years."
Mr Justin Tang, head of Asian research at advisory firm United First Partners, said that due to disparities between the stocks' share prices and valuations, now is a good time for acquirers to take poorly traded companies off the market at reasonable levels.

The number of buyouts and delistings will continue only as long as the market fails to properly value the stocks of listed companies, said Mr Mano Sabnani, an active investor in the Singapore stock market.
"Major shareholders and other institutional investors, like private equity, look at the cash flows and assets of a company and are able to tell when a company is undervalued. It is natural that some would take the opportunity to privatise at low prices."
One reason for the low valuations is a lack of trust in small and medium-sized enterprises (SMEs) on the SGX, Mr Sabnani said.
Past market events such as the 2009 crash of S-chips (Chinese companies listed on the SGX) due to poor governance and the 2013 penny stock crash due to market manipulation have hurt investor confidence in this segment and pummelled share prices. This, in turn, has perpetuated low trading volumes in SMEs, he said.
"Meanwhile, there has been an overall shift in preference to blue-chip stocks and real estate investment trusts, which have steadier yields and are less traded."
Mr Sabnani said SMEs should do more to engage with investors and raise awareness of their businesses and growth potential, adding that "this is now lacking".
Still, some analysts see interest returning to the Singapore market as the Covid-19 pandemic abates and opportunities for growth emerge.
SGX officials have also raised efforts to court secondary listings and bring fresh options, such as special purpose acquisition companies, or Spacs, to market.
In the first half of the year, SGX saw 10 initial public offerings, which raised $572 million in proceeds. In comparison, there were eight new listings in 2021, raising $1.7 billion. Six of this year's IPOs were on Catalist, the SGX platform for fast-growing companies.
The bourse did not respond to queries by press time.

 

[LITTLEREDDOT]

No pay for Sea CEO, top management amid deepening cash flow woes​

In an internal memo sent to staff, Sea CEO Forrest Li said top management will forgo their salaries and tighten company expense policies. PHOTO: THE BUSINESS TIMES

Sep 15, 2022

SINGAPORE - Sea Limited's top management will forgo their salaries and tighten company expense policies, as the Singapore gaming and e-commerce giant tries to shield itself from the economic slowdown threatening tech companies.
Chief executive Forrest Li said in an internal memo sent to staff on Thursday that the leadership team has decided that it will not take any cash compensation "until the company reaches self-sufficiency".
This comes days after Sea shut down operations in some markets and trimmed staff across its divisions.
"We can now see that this is not a quickly passing storm: These negative conditions will likely persist into the medium term," he added.
In his 1000-word missive, seen by Bloomberg News, the billionaire addressed head-on the struggle for Sea in an era of rising interest rates, accelerating inflation and a volatile market.
The company has lost about US$170 billion (S$239 billion) of market value since an October high on questions about its money-making prospects and a global decline in technology stocks.
"With investors fleeing for 'safe haven' investments, we do not anticipate being able to raise funds in the market," Mr Li said, reiterating that the company's primary objective for the next 12 to 18 months is to achieve positive cash flow as soon as possible.

The company will cap business travel to economy class flight fares, with travel meal expenses limited to US$30 a day. It will also curb spending on hotel stays for business trips to US$150 a night, and cull reimbursement for meals and entertainment bills.
"The only way for us to free ourselves from relying on external capital is to become self-sufficient, generating enough cash for all our own needs and projects," Mr Li said.
Sea is facing increasing pressure to simultaneously grow and control costs. Consumers are pulling back on spending online as rising interest rates and prices weigh on the economy, while investors are becoming less willing to bankroll growth without profits.


After grappling with a string of extraordinary setbacks this year - including India's abrupt ban of its most popular mobile game - the company is looking to take significant steps to move from unbridled growth to profitability.
The company has said it expects gaming arm Garena to post its first decline in bookings this year, and last month, it withdrew its 2022 e-commerce forecast.

Sea is facing increasing pressure to simultaneously grow and control costs. PHOTO: SEA LIMITED
Last week, Sea's e-commerce unit said it is leaving Argentina and closing most of its operations in Chile, Colombia and Mexico, retreating from much of Latin America to focus on profitability over growth.
Shopee will close offices in Chile and Colombia and maintain just a small local presence in Mexico to support regional markets, according to a person with knowledge of the matter and an internal e-mail seen by Bloomberg News.
The decision should affect a few hundred jobs, said the person, who asked not to be named as the matter was private.
Shopee CEO Chris Feng cited "elevated macro uncertainty" for the pull-out.
"This means focusing our resources on our core operations," he said in an internal e-mail.
Shopee had also pulled out of France, Spain and India months after launching operations in those markets. BLOOMBERG

 

[mojito]

No trick. Or treats.

 

[Splendicker]

So far has anyone sue sg pool ?

Only if you pump in millions

 

[LITTLEREDDOT]

Sea plans to fire 3% of Shopee Indonesia staff as regional job cuts begin​

The Singapore-based company will begin notifying affected staff on Monday at its cash-burning e-commerce arm Shopee. PHOTO: REUTERS


SEP 19, 2022

SINGAPORE - Sea Limited is preparing to fire 3 per cent of Shopee employees in Indonesia, part of a broader wave of regional job cuts intended to curb ballooning losses and win back investors.
The Singapore-based company planned to begin notifying affected staff on Monday at its cash-burning e-commerce arm, according to an internal memo seen by Bloomberg News.
The 3 per cent cut in Indonesia aligns with layoffs of a low single-digit percentage across the division, a person familiar with the matter said, asking to remain anonymous discussing internal actions.
Shopee is one of Sea’s two major businesses, alongside a gaming arm that popularised the mobile hit Free Fire. The company ended 2021 with more than 67,000 people overall.
Management announced the impending layoffs during a town hall on Monday for affected teams, which included Shopee’s marketing as well as operations units.
“These changes are part of our ongoing efforts to optimise operating efficiency with the goal of achieving self-sufficiency across our business,” Shopee said in an e-mailed statement, without elaborating. The company intends to offer severance packages and assistance as needed, according to the memo.
Sea has lost about US$170 billion (S$239 billion) of market value since an October high on questions about its money-making prospects in an era of rising interest rates and intensifying competition from Alibaba Group Holding in its Asian stronghold.

Last week, billionaire co-founder Forrest Li announced in an internal memo that members of top management will forgo their salaries and tighten company expense policies as the company, which counts Tencent Holdings as its biggest investor, tries to shield itself from the economic slowdown.
Sea's Shopee division, in particular, has pulled back from major markets in Europe and Latin America, in addition to getting banned from India because of rising tensions with Chinese companies.
South-east Asia’s largest tech firm is planning to reduce headcount in gaming - its most profitable division - and in new ventures at its research and development arm, Bloomberg News has reported.
“This was a very difficult decision to make,” management said in the memo. “In general terms, we will offer a fair package for employees who part with us and provide assistance where needed.” BLOOMBERG

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[LITTLEREDDOT]

Elderly woman in dispute with bank over $100k in losses for terminating insurance policy early​

The dispute centres on whether Madam Ong was tricked into making unwise investments or if it is just a case of buyer’s remorse. PHOTO: ST FILE

Joyce Lim
Senior Correspondent

Oct 17, 2022

SINGAPORE – A 69-year-old housewife is trying to recover more than $100,000 in losses after an early termination of an insurance policy she bought from DBS Bank in 2019.
The bank disputes her claims. Early termination usually involves high costs and it says the woman was made aware of this.
Madam Ong, as she wants to be known, says she was told she could take her money out after she had paid the premium for three years, whereas the bank says the minimum premium payment period for such products is 10 years.
It started when Madam Ong decided to buy an insurance product that also offered her annual payouts, after speaking to a DBS employee.
“All my life policies, I needed to go for medical check-ups, but not for this one. I didn’t think I could still buy insurance at the age of 66, but here was this person telling me that I can still be insured and I don’t have to go for a medical check-up in order to buy it,” said Madam Ong, who has filed a complaint against DBS with the Financial Industry Disputes Resolution Centre (Fidrec).
A DBS spokesman told The Straits Times that records showed that Madam Ong had specifically asked its bank employee for a product that, apart from insuring her, also offered her an income payout or annuity.
Madam Ong agreed to pay an annual premium of $60,000 for the Ready Payout Plus policy from Manulife, a Canadian insurer whose products are sold at DBS branches.

Even though the 15-year endowment plan guarantees a cash benefit every year, Madam Ong said it was the death benefit that she was drawn to. She thought her beneficiaries would get $426,000 upon her death, but learnt only last year that this was not the case.
The dispute centres on whether Madam Ong was a naive housewife who was tricked into making unwise investments, or if it is just a case of buyer’s remorse.
Fidrec could not comment on Madam Ong’s case due to confidentiality issues.


Madam Ong recalled receiving a call from the bank after she deposited over $2 million into her DBS account from a windfall she got from a collective sale some time in 2019.
“A bank officer said he had a product to recommend me, one that I cannot resist,” she recalled.
A DBS wealth manager and another staff member followed up with a visit to Madam Ong’s home, where a financial risk assessment was carried out.

An assessment of her finances was run using the bank’s standard financial planning needs framework.
“The policy that Madam Ong eventually purchased was in line with her assessed risk profile, met her indicated investment time horizon and was within her financial means,” the DBS spokesman said.
She added that DBS was fully compliant with Monetary Authority of Singapore guidelines in the sale of the investment product.
As the policy is only for those up to age 65, Madam Ong, who was 66 at the time, had to backdate her purchase to 2018, before her 66th birthday.
Madam Ong said: “I was told that I would be insured for a sum of $426,200. My understanding is that my family would get that money when I die. I don’t work and I thought I wanted to leave something for my family.
“I was told that as long as I pay for three years, I can take my money out (from the policy) later if I cannot afford the premium.”
The DBS spokesman said premiums on such products have to be paid for a minimum of 10 years.
Madam Ong told ST that she had planned to use the collective sale proceeds to pay the premiums, but she also needed money for a new home.
She decided to terminate her policy with Manulife in November 2021 as she wanted to use the money to help one of her three sons with his first property purchase.
“I got a shock when I called the bank and was told that I could get back only about $60,000, when I had paid over $180,000 in premiums,” said Madam Ong.


The bank advised her to keep the insurance plan as an early termination usually involves high costs and the surrender value payable to her would be less than the total premiums paid.
The policy illustration seen by ST shows that the guaranteed surrender value is lower than the total premiums paid for the first 13 years of Madam Ong’s policy.
It was only in the 14th year that the guaranteed surrender value would exceed the total premiums paid.
By then, Madam Ong would be 79 and would have paid about $597,000 in total premiums. Her guaranteed surrender value is projected at $607,341 or 1.7 per cent on top of the total premiums paid.
But based on an illustrated investment rate of return of 3.25 per cent per annum, the break-even point would be in the 13th year, with a profit of 5 per cent.
Apparently Madam Ong found out only last year that the basic sum insured of $426,200 is not a death benefit as she had thought.
The sum insured in the plan is a notional value and is used purely for the purpose of determining the guaranteed cash benefits and bonuses. It does not represent the amount the bank will pay on the death of the life insured.
“I was very traumatised by it because I could have died and my family wouldn’t have gotten the $426,200,” said Madam Ong.
“I asked the bank for a refund because I considered the policy to be dubious and contentious.”


Said the DBS spokesman: “We recognise that elderly customers may potentially be more vulnerable (due to language, or not having enough knowledge about a certain product or service), and thus have strict controls in place to ensure that our customers are fully aware and understand what they are buying into.”
A supervisor had followed up with a call to confirm that Madam Ong understood the risks and penalties in the event of an early termination of the policy. The supervisor also checked if she was comfortable with the premium, the spokesman added.
“During this time, Madam Ong was free to clarify any doubts she may have with the supervisor, and to even discontinue with the policy purchase without incurring any charges or penalties should she change her mind at that point.”

 

[LITTLEREDDOT]

An index that tracks de-SPACs is down 62 per cent this year, and 82 per cent since hitting a peak in February 2021.

US rate hikes put pressure on SPACs

The New York Stock Exchange in August. PHOTO: AFP


OCT 23, 2022

NEW YORK - As the US economy slowly buckles under the strain of soaring interest rates, corporate bankruptcies will pile up.
Few on Wall Street doubt this. The real question they have is which sorts of companies and industries will succumb first.
A good place to start looking: Businesses that went public via special purpose acquisition company (Spac), that anything-goes world of speculative investing that has come to represent the unbridled financial mania the pandemic wrought and the bust that followed.
Bedrock AI, an investment research company that scours regulatory documents, pored through filings issued by hundreds of de-Spacs – which are Spacs, or blank-cheque companies, that found companies to merge with – and determined that more than 40 per cent of them flagged questions about their own viability as going concerns, signalling a risk they could go out of business. A few of them have since filed for bankruptcy.
It is a high percentage, more than double the rate of such filings by companies that went public via traditional initial public offerings over the same period, according to Bedrock AI. And it is a reminder, analysts say, that fewer restrictions were in place and earnings forecasts were very rosy – targets of 50-, 100-, even 300-fold increases in revenue were common – during a nine-month boom in which investors blindly bid up the value of just about anything Spac that financiers brought to market.
With the US Federal Reserve pushing up rates at the fastest pace in decades and demand in the economy cooling, those projections look even more unrealistic now.
“There was so much Spac capital looking for deals that they were lowering the bar for companies that they were partnering with because they were highly motivated to get a deal done,” said Mr Greg Martin, co-founder of Rainmaker Securities, a merchant bank focused on private securities deals.

“You’ll see a greater than expected percentage of bankruptcies.”
An index that tracks de-Spacs is down 62 per cent this year, and 82 per cent since hitting a peak in February 2021.
All told, more than a quarter of the roughly 400 companies that merged with a Spac are now trading below US$2 a share, just a fraction of the US$10 mark the blank-cheque companies typically go public at.
Battered share prices paired with soaring interest rates may put companies with fragile balance sheets in jeopardy. More than 75 former Spacs are already likely to need more financing in the next year to just keep operating. Biotechnology businesses, companies pushing electric vehicles and those who hoped to ride the environmental, social and governance hype are most at risk based on cash on hand and their current spending habits.
Canoo, an electric vehicle start-up that has a pact with Walmart to sell electric vans, had just US$34 million (S$48.4 million) in cash as at June 30.
A month earlier, it issued a warning about its ability to continue as a going concern. But it does have options to access at least US$500 million – one through a deal with hedge fund Yorkville Advisors, and a mixed securities shelf registration. Its stock has sunk 90 per cent since its December 2020 debut and it reported a net loss of US$289.8 million in the first six months of the year.
View, a maker of smart-glass products, has just US$111 million in cash and is seeking to raise additional capital while warning in a file dated Aug 8 of its ability to fund operations beyond next month. The company has reported a net loss of more than US$135 million so far this year. Its stock closed at 99 US cents on Oct 14. When it debuted back in March, it traded near US$9.

Winding down​

Since June, two companies that merged with Spacs filed for bankruptcy after less than a year of being public. Retail start-up Enjoy Technology and electric vehicle company Electric Last Mile Solutions met the same fate in June, while Packable Holdings, an e-commerce business backed in part by the Carlyle Group, started to wind down operations in August after a blank-cheque merger collapsed.
“With these market conditions, there are a lot of companies that are going to need to go away or recapitalise,” said Mr Mike Bennett, managing partner at investment banking company Crewe Capital. “There really are fewer options or no options for some industries like pre-profitable tech unless you’re an outlier or focused on industries doing well even with the market conditions.”
Many of the Spac industry’s most savvy investors are opting to eat millions in losses and close their doors. Serial dealmaker Bill Foley joined “Spac king” Chamath Palihapitiya and billionaires Bill Ackman and Sam Zell when he said he would return roughly US$2.1 billion to investors and shutter a pair of blank-cheque firms.
At least 23 blank cheques have liquidated in 2022, more than double the total seen over the previous five years, data compiled by Spac Research show.
Despite the malaise, some Spac deals continue to lure investors. LiveWire Group, the electric motorcycle business spun off by Harley-Davidson, has been among those able to complete mergers. BLOOMBERG

 

[blackmondy]

Politicians, bankers, property agents and insurance agents are the scums of the world.

 

[LITTLEREDDOT]

Bright spots still ahead for tech giant Sea​

Shopee plans to exit the Argentinian market and shut local operations in Chile, Columbia and Mexico, citing uncertain macroeconomic environment and its aim to focus resources on core business. REUTERS

Adeline Tan

Oct 24, 2022

SINGAPORE – The short-term prospects may not look too rosy for tech giant Sea, but industry watchers believe its dominant positions in a range of markets should stand it in good stead.
The firm’s path to profitability is also being closely watched, with analysts hoping that its recent cost-cutting measures will start to show results.
Sea was founded in Singapore in 2009. It now has three main business units – e-commerce platform Shopee, game developer and publisher Garena and SeaMoney, a digital financial services provider set up in 2014. The company, which is listed in New York, is based here but also has operations in other parts of the world, including South-east Asia, Taiwan and Latin America.
Chief executive Forrest Li said the aim is to become cash-flow positive in the next 12 to 18 months.
The company has trimmed costs through staff cuts and tighter policies on expenses, such as sticking to economy class flights and curbing spending on hotel stays and meals. Sea’s top management will also forgo their salaries until the business is self-sufficient.
Maybank’s head of research in Singapore, Mr Thilan Wickramasinghe, and analyst Kelvin Tan said the company has been taking action to rein in costs and close underperforming businesses. For example, it has made significant changes to monetise its Shopee unit, including cutting back on giveaways and charging sellers for advertisements.
“It is also refocusing on markets where it has leadership. In the medium term, we believe that these changes could support it to increase resilience and earnings visibility,” they added.

Sea’s adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) loss stood at US$506 million for the second quarter of 2022 compared with a US$24.1 million loss in the same period a year earlier. Shopee recorded an Ebitda loss of US$648.1 million for the quarter, but Garena has a positive Ebitda of US$333.6 million.
“Garena is already Ebitda-positive. It is the e-commerce side that needs to bring in the magic... I think we will see a substantial reduction in losses next year,” said DBS Bank’s head of telecom, media and technology research analyst, Mr Sachin Mittal, adding that he estimates Shopee could reduce its Ebitda loss by US$1.2 billion in 2023.
Shopee announced in September that it would exit the Argentinian market and shut local operations in Chile, Columbia and Mexico, citing an uncertain macroeconomic environment and its aim to focus resources on core businesses.
Pulling back from these markets could save Shopee about US$300 million in 2023, said Mr Mittal. Losses in Brazil, which peaked in the fourth quarter of 2021, is expected to narrow in 2023, he added.
Changes in consumer behaviour have been the main cause of slowing growth at many e-commerce platforms, including Shopee. As countries emerge from the Covid-19 pandemic, consumers are shifting some of their spending back to bricks-and-mortar stores.
High interest rates and rising inflation are also prompting consumers to cut back on spending.
But the silver lining for Sea is perhaps its market dominance and how it stands out against its competitors, analysts said. Globally, Shopee was the top-ranked app on Google Play in the shopping category by total time spent in the app in the second quarter of 2022. Garena’s hit game, Free Fire, was also the most downloaded game globally in the same period.
“Shopee is consistently the No. 1 shopping app in South-east Asia; and it has outgrown Lazada by four times,” said the Maybank analysts. Its gross merchandise value hit US$62.5 billion in the 2021 financial year, while Lazada’s was US$21 billion for the 12 months to September 2021.
One strong competitive advantage Shopee has is the ability to cross-promote its products across its platforms. For example, Garena doubles as a social platform and acts as free advertising for Sea’s non-gaming products, the Maybank analysts said.
Despite the headwinds, Sea’s longer-term outlook is positive because of its market share in the Asean region and strong growth potential in the financial services segment, said CGS-CIMB analyst Ong Khang Chuen.
He noted: “Leveraging its strong e-commerce position in Indonesia, Sea has rapidly scaled its digital bank operations there and overtaken digital bank peers to be the leader in both deposits and lending size. We believe it can replicate this in other South-east Asian countries where a huge population remains unbanked.”
Not having very strong competition in many of its markets that it operates in is also an advantage for Shopee, said Mr Mittal, although he noted that Lazada, one of Shopee’s strongest competitor regionally, and Indonesian online marketplace Tokopedia pose challenges.
“In many markets, competition is not a huge worry for Shopee. It dominates the e-commerce sector in South-east Asia, and that is something you can’t ignore,” he added.

 

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SoftBank’s fund loses $10 billion on tech write-downs; declines comment on FTX stake​

SoftBank has been struggling with declines on public investments. PHOTO: AFP


NOV 11, 2022

TOKYO – SoftBank Group’s core Vision Fund arm posted a US$7.2 billion (S$10 billion) quarterly loss as plunging start-up valuations continue to hammer the company’s financial performance.
The Vision Fund segment lost 1.02 trillion yen (S$10 billion) in the July to September period, following a 2.33 trillion yen loss in the June quarter. Overall, the Japanese conglomerate logged a net income of 3.03 trillion yen in the last quarter, buoyed by the disposal of a chunk of its Alibaba Group Holding stake. The company said its total profit on its disposal of Alibaba shares was 5.37 trillion yen.
Billionaire founder Masayoshi Son turned his telecom company into the world’s biggest start-up investor, aiming to repeat his early success in backing the Chinese e-commerce pioneer. But the effort has been plagued by missteps and, more recently, a sharp downturn in technology valuations.
SoftBank has been struggling with declines on public investments, with the Vision Fund recording net valuation losses totalling 1.19 trillion yen on its public holdings in the quarter just ended. Of those, China’s SenseTime Group accounted for 364 billion yen, while United States food delivery firm Doordash accounted for 225 billion yen and Indonesian ride-hailing and e-commerce firm GoTo Group 108 billion yen, it said.
SoftBank also holds a stake in FTX.com, although it has declined to comment on its exposure, even as the crypto exchange’s co-founder Sam Bankman-Fried says he may file for bankruptcy.
“I don’t think anyone can conclusively say that markets have bottomed,” said Mr Kirk Boodry, an analyst at Redex Research.
Mr Son and SoftBank have been trying to wait out the slump, selling off shares in Alibaba and Uber Technologies to raise cash and shore up its balance sheet. Much of its future investment strategy hinges on its ability to make good on its US$32 billion purchase of chip designer unit Arm, and take it public next year.

Chipmaker sentiment has soured drastically in recent weeks, putting the onus on Arm’s finances to make any initial public offering successful. After making introductory remarks, Mr Son plans to hand over the earnings call to chief financial officer Yoshimitsu Goto to focus on Arm’s operations, SoftBank said.
As attention turns to SoftBank’s balance sheet, the company has been hurrying to offload assets to bolster its bottom line and fund a share repurchase spree that has vaulted its share price more than 40 per cent since the start of this quarter.
The accelerated pace of its stock buybacks has sparked renewed speculation that Mr Son may lead a management buyout of SoftBank – something that he has talked internally about, Bloomberg News has reported.
Beyond Alibaba, SoftBank’s pipeline of asset sales that may fund future buybacks include British online shopping group THG, British network provider Pelion, distressed-debt specialist Fortress Investment Group and Indonesian ride-hailing and e-commerce firm GoTo Group, according to Bloomberg Intelligence. BLOOMBERG

 

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Singapore investors in bankrupt FTX crypto exchange resigned to writing off losses​

Institutional investors who backed FTX may face scrutiny for possibly allowing the company to run with little oversight. PHOTO: REUTERS
Yong Li Xuan


NOV 12, 2022

SINGAPORE - When news broke earlier this week about a liquidity crunch at cryptocurrency exchange FTX, financial adviser Ng Ming Jie was among those who tried to withdraw crypto from the platform.
The 33-year-old, who had been trading on FTX since mid-2021, was introduced to the platform by financial influencers, or finfluencers, online and stayed because of the comparatively low fees and functionality.
After FTX filed for bankruptcy on Friday and began investigating a potential hack, Mr Ng has accepted he may never recover the “tens of thousands of dollars” he had invested on the platform.
“I didn’t put my life savings into it,” he said. “But it’s tens of thousands of dollars. I could have bought a new MacBook, television, refrigerator, washing machine and gone on a trip to Japan and still have money left over.
“That little bit of faith I had left in cryptocurrency is lost,” added Mr Ng who had invested about $70,000 in crypto exchanges since 2020.
Due to the volatility of crypto and the interest rate hike at the start of 2022, he had pulled back on his crypto investments from 30 per cent to less than 10 per cent of his investment portfolio.
Still, Mr Ng said FTX’s collapse was “super unexpected” because it was one of the largest crypto exchanges and many finfluencers such as personal finance expert Graham Stephan had promoted the platform actively on social media. “It’s almost equivalent to DBS, OCBC or UOB going under,” he added.

Due to backing from institutional investors such as Sequoia Capital and Singapore global investment company Temasek and a high trading volume, FTX was one of the more reputable exchanges, said Blockchain Association Singapore co-chairman Chia Hock Lai.
But after a CoinDesk article claimed last week that much of sister company Alameda’s assets were made up of FTX tokens (FTT) issued by FTX, allegations that FTX had offered extreme leverage – borrowing from some customers to lend to others – also surfaced.
“No one could have known they had bad practices,” said Mr Chia, noting that an exchange this large has never failed in this manner.

Institutional investors who backed FTX may face scrutiny for possibly allowing the company to run with little oversight.
“This is going to be a drawn-out process. A lot of skeletons in the closet will be dug out,” Mr Chia said.

Temasek, which is among FTX’s prominent institutional investors, said it had no further comments at this time. Temasek had previously told Reuters: “We are aware of the developments between FTX and Binance, and are engaging FTX in our capacity as shareholder.”
Mr Chia said he expects regulators to clamp down on crypto exchanges by restricting them from using customers’ funds or offering leverage, which will increase the cost of compliance to exchanges.
The Monetary Authority of Singapore (MAS) on Oct 26 published two consultation papers proposing regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and support the development of stablecoins.
Some of the proposed measures could require exchanges to disclose risks to retail investors so they can make informed decisions, as well as ban leverage by retail investors for crypto trading.
Ironically, some investors said in WhatsApp and Telegram crypto chats that they had moved to FTX because MAS stopped Binance from operating in Singapore.
For now, industry players are concerned about how FTX’s meltdown would affect its projects and other companies linked to it.
Though crypto prices across the board have fallen because of the collapse, crypto that FTX invested in, such as Solana, have seen prices plummet because investors expect FTX to liquidate all assets during the bankruptcy process.
Mr Daniel Lee, head of Web3 at Banking Circle who helped to set up the DBS Digital Exchange in 2018, expressed concern for the industry.
“Like it or not, crypto is part of the financial infrastructure. It is no longer just a small sideshow,” the 53-year-old said. “People could lose their jobs and there are a lot of jobs related to crypto.”


Mr El Lee, who invested in FTT and used FTX, said he is saddened by how the collapse transpired, but he remains committed to crypto.
“The industry will recover from the incident, but FTX will not,” said the co-founder of Digital Treasures Center who has been in the crypto industry since 2015. “I’ve never sold any of my major cryptocurrencies before. People might think it’s silly, but I’m a believer.”
The 36-year-old has written off all his investments tied to FTX and does not intend to try to recover them, but he may move his crypto assets to exchanges or wallets closer to home because of tighter regulations and accountability.
Bloomberg reported that investors with crypto on the FTX platform numbered more than five million worldwide at its peak, and many are resigning themselves to the fact that their holdings may be gone forever.
Investors who traded on the platform will have an idea of how much FTX’s assets are worth after the bankruptcy is finalised, but they are unlikely to recover much of their assets, Mr Chia said.
“Crypto is a very risky asset class, retail investors should avoid it,” he said, adding that retail investors should invest not more than 5 per cent of their net worth in it. “You could lose everything.”

 

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Answers needed in curious case of FTX’s Singapore entity​

Claire Huang
Business Correspondent

A key issue that has come up is why Singapore retail users and their assets are not parked under FTX's Singapore entity Quoine, which received an exemption from MAS. PHOTO: NYTIMES

NOV 15, 2022

SINGAPORE - The implosion of FTX, one of the darlings of the cryptocurrency world, has raised several important questions, the key of which points to fundamental flaws both within the exchange and outside.
FTX has filed for protection from bankruptcy as it owes billions to global users, wiping out hope that retail users can get any money back.
And herein lies a problem: Why are Singapore retail users and their assets not parked under FTX’s Singapore entity, Quoine, which has received an exemption from the Monetary Authority of Singapore (MAS)?
Doing so would have been good governance and in line with how FTX’s units in Japan and the United States operated. For background, FTX had in April wrapped up the acquisition of Japanese crypto exchange Liquid, which had a subsidiary, Quoine.
Quoine was granted an exemption from holding a licence under the Singapore Payment Services Act.
This meant it was allowed to offer digital payment token services to Singapore retail investors while it applied for an MAS licence.
The company was to be renamed FTX Singapore once it obtained a licence from MAS.

A check with users and people with knowledge of the company found that there has been no formal migration process of Singapore users from FTX.com to Quoine.
As former parliamentarian Calvin Cheng, who has an investment company that was awarded a Dubai virtual asset licence, said: “If Quoine is exempted and FTX.com isn’t, then FTX.com can’t be onboarding clients directly, only Quoine can.
“But when users sign on with FTX, did they sign on with Quoine? Were the funds stored by Quoine? Obviously not, otherwise the funds wouldn’t be stuck. It was stuck in FTX.com,” he said.

An FTX.com user who wanted to be known only as Mr Liu, 33, said unlike in Japan and the United States, “we were not forced to follow under the FTX Singapore entity”.
In Japan for instance, FTX set up a Japanese entity as required by the regulator and moved all its Japanese customers to this outfit, which has limited features and coins that can be traded.
“If you’ve a Japan-licensed entity, the firm has to have collateral assets to back its obligations,” said a person familiar with the industry.
American users have to open an account with FTX US and are not able to do so on FTX.com.

This brings us to the next issue – that crypto regulation in Singapore needs to be applied across the board.
Observers have drawn comparisons between the treatment of Binance and FTX, both of which are global exchanges that tried to obtain a licence from MAS through a Singapore entity.
MAS on Sept 2 last year ordered Binance to stop providing payment services in Singapore and to cease soliciting business from Singapore residents. It also placed Binance.com on its investor alert list to warn consumers that the exchange is not licensed in Singapore.
At that time, the regulator said it reviewed Binance.com’s operations and was of the view that the website’s operator Binance “may be in breach of the Payment Services Act for carrying out the business of providing payment services to, and soliciting such business from, Singapore residents without an appropriate licence”.
Binance’s Singapore entity in December withdrew its application for a licence from MAS and by February the subsidiary wound up.
Said Mr Cheng: “Binance was the only non-licensed offshore exchange that Singaporean residents couldn’t use. They complied. Did FTX.com have a licence, or any of the many global offshore exchanges out there?”
The issue here is compounded by the fact that many Singapore retail investors have been burnt in the FTX episode.
Singapore is said to account for more than 5 per cent of FTX’s total user percentage, behind South Korea, which is the top country, and ahead of Germany, which is in the third spot, based on earthweb.com.

Take 37-year-old Charles Tan for example. He shifted his trading to FTX in mid-2020 because of the Binance ban, and found FTX to be more user-friendly. Similar stories of how people were hit because they moved their money to FTX after Singapore’s Binance ban have popped up in local crypto circles and on social media.
Mr Alex Svanevik of blockchain analytics platform Nansen on Nov 9 wrote on Twitter: “A lot of people in Singapore held funds in FTX because Binance is banned here. Sad and ironic.”
MAS has said time and again that it cannot ban crypto trading because it is global. More importantly, it wanted to avoid driving retail users here to unregulated platforms overseas that it did not have oversight of.
For the uninitiated, FTX was founded by Mr Sam Bankman-Fried, who is in the Bahamas after his company filed for protection from bankruptcy and he resigned as chief executive.
The exchange is widely raved about in the crypto world and as staff would say of Mr Bankman-Fried: “People thought he’s not human, so he can do anything he wants.”
Mr Bankman-Fried was obviously charming and “very well-loved”, but in the corporate world, that should never be enough when it comes to investments, especially if hundreds of millions are to be poured in.
As a corporate veteran pointed out: “I’m surprised all the big private equity firms put so much money into FTX, which didn’t even have a board of directors. This is so basic.”

 

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Singapore’s Temasek to write down over US$200 million in FTX​

Another backer, Sequoia Capital, wrote down the full value of its US$214 million bet on FTX. REUTERS

Nov 16, 2022

SINGAPORE – Singapore’s state-owned investor, Temasek International, invested between US$200 million and US$300 million into cryptocurrency firm FTX before its implosion, according to people familiar with the matter.
Temasek is now preparing to write off the entire amount, one of the people said, asking not to be identified as the matter is private. Another backer, Sequoia Capital, wrote down the full value of its US$214 million bet on the exchange, while a person with knowledge of the situation said SoftBank Group Corp. is expecting a loss of around US$100 million on its investment.
A Temasek representative declined to comment.
The meltdown of Sam Bankman-Fried’s FTX empire and the evaporation of capital from its institutional backers is shaking confidence throughout the crypto world. The firm had been considered by some investors as one of the safer bets in the sector thanks to its size and role as an exchange, rather than being just an active manager of digital currency.
A potential FTX writedown wouldn’t have a major impact on Temasek’s overall financial standing. The Singaporean firm, which managed S$403 billion in assets as of March 31, said in July it didn’t invest in crypto directly, focusing instead on building the ecosystem. When asked about the valuations of FTX and Amber Group, another crypto company it backed, Temasek US West Coast head Martin Fichtner expressed confidence in the long-term performance of its portfolio companies.
“What we focus on is this: Are the businesses healthy and are they growing, and do we think the prospects are strong?” he said at the time. “We feel strongly about the companies in our portfolio performing well over time, and we’ll see cycles in terms of multiples go up and down as the cycles occur.”
Since then, FTX has filed for Chapter 11 bankruptcy and Bankman-Fried has stepped down as its chief executive officer. Amber, which was seeking to raise funds at a US$10 billion valuation earlier this year, is now aiming for a US$3 billion value. BLOOMBERG

 

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Statement on FTX - Temasek​

17 NOV 2022

Our Blockchain strategy
Innovative technologies, including blockchain technology, are enablers with the potential to transform sectors and create a more connected world. The nascency of the blockchain and digital asset industry presents innumerable opportunities as well as significant risks.
As such, we closely track the risks involved and have taken a calibrated two-pronged approach for exposure in this space – venture building and investing.

• Our venture building efforts have been focused on programmable money, digital assets tokenisation, and decentralised identity and data. Several of these entities are not blockchain-based at this stage but rely on the technology and focus on delivering open data solutions and open networks.
• Our blockchain investment activity focuses on:
  • Financial market service providers to the digital asset space providing protocol agnostic and market neutral exposure; and
  • Technology infrastructure including protocols, wallets, developer tools, cross-chain messaging, metaverse and gaming infrastructure

Background on our investment in FTX
We believe that exchanges form a key part of global financial systems.
The thesis for our investment in FTX was to invest in a leading digital asset exchange providing us with protocol agnostic and market neutral exposure to crypto markets with a fee income model and no trading or balance sheet risk.
We invested US$210 million for a minority stake of ~1% in FTX International, and invested US$65 million for a minority stake of ~1.5% in FTX US, across two funding rounds from October 2021 to January 2022.1 The cost of our investment in FTX was 0.09% of our net portfolio value of S$403 billion as of 31 March 2022.
There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies.

Our risk-return framework and due diligence processes
Our investment discipline, centred around intrinsic value and our risk-return framework, guides our due diligence for new investments and ongoing engagement with our investee companies. 
As an investor-owner seeking sustainable returns over the long term, we believe that we have to invest in new sectors and emerging, nascent business models to understand the applications and impact they may have on the business and financial models of our existing portfolio, or be drivers for future value in an ever-changing world. This is why we invest in early stage companies and accept the binary risks associated with such investments. Our early stage investments constitute ~6% of our portfolio, and as a group have generated good returns for us, with IRRs in the mid- teens. However, we do recognise the inherent risks of investing in early stage companies and take a very measured approach to such investments by applying an illiquidity risk premium on the cost of capital. In addition, we also add on a venture risk premium for the early stage they are in. Our blockchain direct investments are not a significant part of our early stage investments.
Similar to all investments, we conducted an extensive due diligence process on FTX, which took approximately 8 months from February to October 2021. During this time, we reviewed FTX’s audited financial statement, which showed it to be profitable. In addition, our due diligence efforts focused on the associated regulatory risk with crypto financial market service providers, particularly licensing and regulatory compliance (i.e. financial regulations, licensing, anti-money laundering (AML)/ Know Your Customer (KYC), sanctions) and cybersecurity. Advice from external legal and cybersecurity specialists in key jurisdictions was sought, with legal and regulatory review done for the investments.
Separately, we also gathered qualitative feedback on the company and management team based on interviews with people familiar with the company, including employees, industry participants, and other investors.
Post investment, we continued to engage management on business strategy and monitor performance.
We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.
Reports have since surfaced that customer assets were mishandled and misused in FTX. If these statements are true, then this amounts to serious misconduct or fraud at FTX. All of this is currently being investigated by the regulators.
It is apparent from this investment that perhaps our belief in the actions, judgment and leadership of Sam Bankman-Fried, formed from our interactions with him and views expressed in our discussions with others, would appear to have been misplaced.
We expect companies that we invest in to comply with their obligations under the laws and regulations of jurisdictions in which they have investments or operations; abide by sound corporate governance; and above all act ethically always. As we only had a ~1% stake in FTX, we did not have a board seat. However, we take corporate governance seriously, engage the boards and management of our investee companies regularly and hold them accountable for the activities of their companies.

Going forward
We are supportive of the efforts of the regulators and the courts, and we encourage the principals involved with FTX to cooperate for an orderly resolution of outstanding matters.
We continue to recognise the potential of blockchain applications and decentralised technologies to transform sectors and create a more connected world. But recent events have demonstrated what we have identified previously – the nascency of the blockchain and crypto industry and the innumerable opportunities as well as significant risks involved.
In view of FTX’s financial position, we have decided to write down our full investment in FTX, irrespective of the outcome of FTX’s bankruptcy protection filing.
There are inherent risks whenever we invest, divest, or hold our assets, and wherever we operate. While this write down of our investment in FTX will not have significant impact on our overall performance, we treat any investment losses seriously and there will be learnings for us from this.
We will continue to remain prudent and exercise caution even as we explore opportunities that are aligned with our structural trends, to deliver sustainable returns over the long term for our overall portfolio.

________________________

1 We participated in two funding rounds – Series B (concurrently across B and B-1 in October 2021) and Series C (January 2022).

 

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Ex-Hyflux CEO Olivia Lum, ex-CFO and four others charged with violations of Securities and Futures Act​

Ex-Hyflux CEO Olivia Lum arriving at the State Courts on Nov 17, 2022. ST PHOTO: GAVIN FOO

Grace Leong
Senior Business Correspondent

NOV 17, 2022

SINGAPORE - Hyflux’s founder and former chief executive Olivia Lum Ooi Lin, former chief financial officer Cho Wee Peng and four former board members were on Thursday charged with violations of the Securities and Futures Act.
This comes 17 months after the water treatment firm was approved to be wound up, which likely left about 34,000 investors of perpetual securities and preference shares, who had sunk in a combined $900 million, with nothing.
In a joint statement, the authorities said the six were charged over “Hyflux’s intentional failure to disclose information relating to the Tuaspring Integrated Water and Power Project”.
According to the charges, this information was necessary to avoid the establishment of a false market in Hyflux’s securities.
Lum, 61, who was handed three charges, is out on bail of $100,000.
She was charged with consenting to Hyflux omitting information relating to Tuaspring , when disclosure was required under Singapore Exchange (SGX) listing rules.
According to the charge, she consented to intentionally failing to notify SGX that the Tuaspring project was Hyflux’s expansion into a new business of selling electricity, and that the plant’s profitability was contingent on electricity sales revenue, which was projected to make up a significant proportion of its overall revenue. If convicted, she faces jail of up to seven years, a fine of up to $250,000, or both.


Lum was also charged over Hyflux’s omission to disclose the information about Tuaspring in the 2011 offer information statement issued for the offer of $200 million, 6 per cent preference shares on April 13, 2011. If convicted, she faces jail of up to two years, a maximum fine of $150,000, or both.
She was charged with an offence under the Companies Act over her failure to ensure Hyflux’s compliance with accounting standards when it disclosed its statements for the financial year ended Dec 31, 2017, at a Hyflux annual general meeting in 2018. This included failing to disclose the breach of a subsidiary’s loan agreement that permitted its lenders to demand accelerated repayment. If convicted, she faces a fine of up to $50,000.
Senior corporate finance lawyer Robson Lee noted that under the Companies Act, a company’s audited financial statements must contain enough information to give a “true and fair view” of its financial position and performance.

Cho, who is also Hyflux’s former group executive vice-president, was charged with conniving in Hyflux’s omission to disclose the information about Tuaspring. The 53-year-old, who is out on $160,000 bail, left his most recent role as CFO of real estate investment firm ESR Group on Sept 19, 2022, for health reasons.

The former Hyflux independent directors also charged with disclosure-related offences were: Teo Kiang Kok, 66; Christopher Murugasu, 63; Gay Chee Cheong, 66; and Rajsekar Kuppuswami Mitta, 65.
The four men were charged with two counts each – one for neglect relating to Hyflux’s failure to disclose information relating to Tuaspring as required under SGX listing rules, and another for omitting material information in the 2011 offer information statement.
Teo and Gay are out on bail of $160,000 each. Mitta is out on bail of $240,000, while Murugasu is out on $80,000 bail.

The charges follow a joint probe in June 2020 by the Commercial Affairs Department, the Monetary Authority of Singapore and the Accounting and Corporate Regulatory Authority (Acra), which the agencies initiated after a review of Hyflux’s compliance with accounting and auditing standards as well as disclosure rules. The probe looked at whether there were lapses in Hyflux’s disclosures concerning the Tuaspring project, and non-compliance with accounting standards between 2011 and 2018.
On Thursday, the authorities said they have investigated DBS Bank over its role as issue manager in the offer of $200 million, 6 per cent preference shares on April 13, 2011. No further action will be taken after reviewing the evidence, but the outcome of Acra’s inspection of audits conducted by Hyflux’s auditor KPMG will be finalised later, they added.
Hyflux was placed under judicial management in November 2020, and the High Court in July 2021 approved its winding up, after the company failed to secure a white knight while it was under a debt moratorium for almost two years.
Hyflux’s troubles began after its foray into the energy business through the Tuaspring plant. Once Hyflux’s largest asset, Tuaspring had been a drag on earnings since it began operations in March 2016.
The plant was hit badly by an oversupply of gas that depressed electricity prices below fuel costs, creating a cash-flow crunch, while Hyflux continued to borrow heavily from banks and investors through the issuance of perpetual securities.Analysts also said that Hyflux might have taken on too many capital-intensive projects with long gestation times, borrowed beyond its means, and was too optimistic with its projections.
The authorities said in June 2020 that they were investigating all the directors who served on the Hyflux board between 2011 and 2018, including Lum, former independent directors Gay, Teo, Murugasu, Lee Joo Hai and Lau Wing Tat, as well as non-executive and non-independent director Gary Kee.

Ms Lum (centre) was also charged under the Companies Act for failure in ensuring Hyflux’s compliance with accounting standards. ST PHOTO: GAVIN FOO
Mr Lau was appointed to the board in July 2014, replacing Rajsekar Kuppuswami Mitta, who left the board in 2012 after having served as non-executive independent director since April 2007.

Founder of Hyflux Olivia Lum pictured at Hyflux’s Tuaspring Desalination Plant at Tuas on Sept 10, 2013. PHOTO: ST FILE
Former independent director Simon Tay, who resigned in February 2020 over disagreements with the board, was also part of the group under scrutiny.
Meanwhile, it is unclear if a pre-emptive lawsuit brought by Hyflux, its subsidiaries and their liquidators from Borrelli Walsh against Lum is still on hold. Hyflux’s liquidators are still investigating if there are sufficient grounds to pursue claims.
When asked by The Straits Times, Mr Eddee Ng of Tan Kok Quan Partnership, representing the plaintiffs, said: “We have made clear our position on not being able to comment.”

 

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GIC invested in parent firm of troubled crypto broker Genesis, expects high volatility in short term​

When asked about GIC’s investment in Digital Currency Group, the sovereign wealth fund said it does not comment on individual investments, adding that it expects investments to remain highly volatile. PHOTO: GIC

Claire Huang
Business Correspondent

24 Nov 2022

SINGAPORE – Singapore sovereign wealth fund GIC, which is an investor in the group with ties to troubled cryptocurrency broker Genesis Trading, says it expects volatility in investments to stay high in the short term.
Venture capital firm Digital Currency Group (DCG), which owns Genesis and asset manager Grayscale Investments, had raised US$700 million (S$963 million) in November last year from prominent investors such as Softbank, Google’s Capital G, Ribbit Capital and GIC.
In a letter that was leaked online, DCG chief executive Barry Silbert sought to reassure shareholders of the group’s financial stability, as the potential bankruptcy of Genesis is causing jitters.
Mr Silbert, a former investment banker at Houlihan Lokey, wrote in a letter saying that the group is still on track to hit US$800 million in revenue this year.
But he said DCG owes Genesis’ crypto lending arm US$575 million, which is due in May next year. The loan is from Genesis Global Capital, which stopped withdrawals last week due to a liquidity crunch, and the funds were used for DCG’s share buybacks and investments.
Other debts of DCG stated in the letter are a US$350 million credit facility from “a small group of lenders” led by investment firm Eldridge, and a US$1.1 billion promissory note that is due in June 2032 when DCG took over Genesis’ liabilities in relation to the now-bankrupt crypto hedge fund Three Arrows Capital.
When asked about GIC’s investment in DCG, the sovereign wealth fund told The Straits Times that it does not comment on individual investments.

It added: “In the short term, we expect volatility to remain high. Over the long term, we continue to focus on the development of blockchain technology and business models.”
DCG is a crypto player with long tentacles given that it has stakes in more than 160 firms, including Nasdaq-listed exchange Coinbase Global, payments network Ripple and wallets Circle and Ledger. It was valued at US$10 billion last year.
The group said on Twitter a week ago that the suspension of withdrawals at Genesis “has no impact on the business operations of DCG and our other wholly owned subsidiaries”.
Genesis, which is reportedly looking for fresh funding, said on Twitter last week that it was dragged down by the collapse of Three Arrows Capital and crypto exchange FTX.
Troubles at Genesis Global Capital also led to a suspension of withdrawals at exchange Gemini for the latter’s Earn programme – a scheme where investors may choose to lend crypto to certain institutional borrowers to earn interest.
Genesis’ Singapore entity, called Genesis Asia Pacific, in late June received an in-principle approval from the Monetary Authority of Singapore (MAS) to offer digital payment services.
In the meantime, Gemini’s Singapore entity is exempted by MAS from holding a licence under the Payment Services Act, as it is in the midst of applying for a licence in Singapore.

 

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S’pore-based crypto lender Hodlnaut faces police probe, public urged to submit documents​

Police said the Commercial Affairs Department has launched a probe into Hodlnaut and its directors for possible cheating and fraud offences, under Penal Code 1871. PHOTO: REUTERS
Clara Chong and Claire Huang

Nov 24, 2022

SINGAPORE – Embattled Singapore-based cryptocurrency lender Hodlnaut, which has $18.5 million worth of assets parked with the now bankrupt exchange FTX, is facing an investigation from the police.
On Wednesday, the police said the Commercial Affairs Department (CAD) has launched a probe into the firm and its directors, who were unnamed, for possible cheating and fraud offences under Section 417 and Section 424A of the Penal Code 1871.
Hodlnaut’s co-founders Zhu Juntao and Simon Eric Lee are both directors of the company.
Between August and November 2022, multiple police reports were received which alleged that Hodlnaut and/or its directors had made false representations relating to the company’s exposure to the collapsed Terra/Luna digital token ecosystem.
Hodlnaut is one of many crypto firms battered by a market rout triggered by the collapse of stablecoin TerraUSD and sister token Luna.
Earlier reports said Hodlnaut’s directors downplayed the extent of the group’s exposure to Terra/Luna both during the period leading up to and following the Terra/Luna collapse in May 2022.
Terra’s implosion led to the downturn across the wider crypto market.

Several companies, including prominent hedge fund Three Arrows Capital, filed for bankruptcy alongside crypto lenders Celsius Network and Voyager Digital.
It was earlier reported that Hodlnaut suffered a near US$190 million (S$263 million) loss from the wipeout.
Hodlnaut halted withdrawals in August and is now under judicial management, or a form of debt restructuring – a matter that is being disputed on many fronts and by different parties in the High Court.
In a Nov 11 notice, the current interim judicial managers (IJMs) – Ms Angela Ee Meng Yen and Mr Aaron Loh Cheng Lee of EY Corporate Advisors – confirmed that 25 per cent of Hodlnaut’s assets are held on centralised exchanges.
Of that, about 72 per cent or $18.5 million were parked with FTX.
The IJMs said they tried but failed to get the assets out from FTX before it suspended withdrawals two weeks ago.
In a Sept 10 notice, the IJMs said customers’ digital tokens deposited with Hodlnaut were lent to Hodlnaut HK, whose key assets were tokens staked on decentralised finance (DeFi) platforms. As at Aug 8, Hodlnaut HK owed about $82 million to Hodlnaut.
The IJMs were told that the Ethereum merge could trigger a liquidation of the tokens staked on the DeFi platforms by Hodlnaut HK, of which Mr Lee and Mr Zhu are also directors. In the same notice, reference was made to another matter.

The police and CAD had earlier ordered Samtrade Custodian, which holds the assets of Hodlnaut, to transfer the lender’s balance assets to the two authorities. Hodlnaut had on July 27 applied to quash this order.
The Sept 10 notice said the Attorney-General’s Chambers had made a proposal to resolve this order. Mr Lee is now fighting the appointment of the IJMs. He has suggested that law firm WongPartnership step in.
Meanwhile, a creditor named Chen Yuanxi has waded in on the IJM war by nominating Deloitte, a Nov 18 notice said.
The police advise people who have deposited digital tokens with Hodlnaut and believe that they may have been defrauded to lodge a report at a neighbourhood police centre or online.
The public will need to provide documents relating to their transactions with Hodlnaut.
They include records of payments made to and received from Hodlnaut, as well as relevant correspondence with the cryptocurrency lender.