September 11, 2020 - Sheng Ye Capital Limited (“SY Capital” or the “Company”, HKEx: 6069), China’s first commercial factoring company listed on the main board of the Hong Kong Stock Exchange, announced a top-up placement of maximum 55,500,000 shares, representing approximately 5.93% of the enlarged issued share capital of the Company. The share placement was priced at HK$7.00 per share. The placement attracted strong market interest from a number of internationally renowned investment institutions. Upon completion of the transaction, SY Capital will realize up to RMB2.89 billion in total equity and could become the largest third-party commercial factoring company in mainland China by that measure.
In addition, SY Capital recently announced a US$50 million three-year credit funding collaboration with Dignari Capital Partners. Despite the global economic downturn and capital market turmoil, SY Capital managed to maintain stable growth and obtain funds through diversified channels in the capital markets. The sum of announced financing plans in the past 30 days amounted to US$100 million. This round of capital funding initiatives will further optimize SY Capital’s debt and capital structure, business operations and expedite development.
Furthermore, the Company plans to use the proceeds to expand supply chain financing operations, enhance its proprietary online factoring platform, Software-as-a-Service capabilities and data-driven risk control systems. Proceeds will also be used to grow market share, enhance product innovation to provide better user experience to SME customers and facilitate digital transformation of the supply chain financing ecosystem. Leveraging on the further enhancement of its fintech capacities, SY Capital is exploring new ways to collaborate with more core business partners and SME customers through its fintech solutions to create a data-driven ecosystem that makes supply chain financing more flexible and cost-efficient.
With the announced placement, the Company expects to onboard internationally renowned long-only funds, multi strategy funds, and major family office funds. Upon completion, the placement will also expand SY Capital’s shareholder base, increase liquidity of its stock, allowing more international investors to share the fruit of China’s rapidly growing factoring market, fintech industry and SY Capital. As of June 30, 2020, SY Capital’s earnings per share increased by 43% compared to the same period last year. With recorded stable dividend distribution in the past two years, the Company has created solid returns for shareholders.
As a leading supply chain fintech platform, SY Capital focuses on the infrastructure, medical and energy sectors, three large contributors to the economy that are more resilient to economic cycles. The Company has developed a “1+N+Fintech” business model and has established strategic partnerships with large blue-chip enterprises. Driven by technology, SY Capital is able to convert transaction data sets into actionable credit scores and provide high quality suppliers in the supply chain with effective and diversified supply chain financing solutions.
This is the second placement of SY Capital since its listing on the Hong Kong Stock Exchange in 2017. In July 2017, with SY Capital’s successful debut on the Growth Enterprise Market (“GEM”) of the Hong Kong Stock Exchange, raising net proceeds of HK$334.6 million through a global offering of 185 million shares, it became the first listed commercial factoring company with the largest GEM IPO of that year. In July 2018, SY Capital raised a total of HK$819 million in the largest share placement of the year on GEM and brought onboard three strategic shareholders, China Taiping’s subsidiary, Taiping Trustees, Olympus Capital and Pavilion Capital, a wholly owned subsidiary of Temasek. Later, SY Capital was included in the MSCI Index, Hang Seng Composite Index and the Shenzhen-Hong Kong Stock Connect, gaining continuous traction from international capital markets.
In addition to SY Capital's core competencies and long-term strategy, investors are also excited by current positive trends in the factoring industry. In 2019, the China Banking and Insurance Regulatory Commission issued a “Notice on Strengthening the Supervision and Administration of Commercial Factoring Enterprises,” which created opportunities for third-party factoring companies to expand their market share. In addition, legislation of factoring contracts that was introduced in the following year in China’s Civil Code demonstrated state-level recognition and policy support, and laid a solid foundation for the future development of the factoring industry. Amid the pandemic this year, the Chinese government has encouraged industry players to provide stronger supply chain financing support to small, medium and micro enterprises (SMEs), indicating that the government attaches great importance to the factoring industry. Moreover, the rapidly growing market continues to drive new opportunities for the sector. According to Frost & Sullivan, third-party commercial factoring volumes grew at a nearly 100% CAGR for the past five years. Boosted by policy support and strong demand from an underserved market, SY Capital has drawn widespread attention for its strong fintech capabilities and value proposition from various international institutions that have performed in-depth analysis on the Company. In recent reports, DBS Bank in Singapore and BOCI Securities both acknowledged SY Capital’s strengths in digital risk management, and expressed optimism about its market prospects.
Given the massive financing demands of SMEs, this placement will help SY Capital to further enhance its financial strengths and drive profit growth. Upon completion, the placement will allow SY Capital to develop an asset-light platform and seize strategic opportunities. In the future, SY Capital will continue to push forward its “one core, two wings” strategy, with the “core” representing its supply chain financing platform and “two wings” representing fintech innovation and overseas expansion. Spurred by huge market demand, SY Capital will upgrade its business to an asset-light model, empower the industry with technology, expand the industry ecosystems and its presence in Southeast Asia, and create a more efficient and robust supply chain financial services platform. As of June 30, 2020, SY Capital’s IT staff accounted for 37% of its total headcount and was 61% larger than a year ago. Meanwhile, SY Capital is also applying for a Singapore digital wholesale banking license in an effort to open up new strategic growth opportunities in Southeast Asian markets.
SY Capital is committed to becoming the most reliable supply chain fintech platform across Asia-Pacific. The proceeds from this placement will further facilitate SY Capital’s mission – to make supply chain financing more efficient and inclusive. The Company is dedicated to rewarding investors and customers with superior performance for their long-term trust and support.
