Renaissance wins backer for Singapore move

By ADAM GIFFORD

Listed technology distributor Renaissance Corporation has won heavyweight backing for its plan to spin off its business-to-business e-commerce division Conduit into a separate company listed on the Singapore Stock Exchange.

Managing director Mal Thompson said Development Bank of Singapore, the largest banking group in Southeast Asia, would sponsor the initial public offering of shares, planned for the first quarter of 2001 if market conditions were right.

DBS Bank has led or co-managed 135 of the 290 new issues in Singapore market since 1985.

"We presented to a number of potential backers," he said. "These guys liked what they saw and came back quickly and gave us a favourable valuation."

The minimum market capitalisation for a main-board listing in Singapore is $S80 million ($108 million). That would make the value of Conduit at least three times last Friday's market value of Renaissance, which was $33.5 million, or 95c a share.

"That's showing the value there is in Singapore for e-commerce type companies," said Mr Thompson.

Conduit will be restructured before listing. Mr Thompson said its directors were negotiating to place a minority shareholding with an Asian investor who could add significant value.

Renaissance intends to distribute a majority of its Conduit shares to its shareholders close to the listing date, without any cash payment. There will also be a buy-back of Renaissance shares.

That means Renaissance shareholders will end up with the same proportional ownership of Renaissance, as well as directly owning shares in Conduit.

"Renaissance itself will end up a substantial though minority shareholder," said Mr Thompson, "and it's quite possible the Renaissance balance sheet will look stronger because there could be cash coming back from the float."

Conduit is built on the e-commerce and supply chain software and systems that Renaissance created to run its own business.

It offers companies a way to take their business on line, by hosting websites.

Unlike other products, which are often just web front-ends, Conduit links through to back-end systems, so an order placed on a website automatically generates a dispatch note in the warehouse.

"This is really supply chain management," said Mr Thompson. "It's the dirty background stuff, the real processing, the spare parts, the service calls, the dead-on-arrivals ... the stuff which happens in any business with manufacturing and distribution logistics.

"We've built it around a real business doing a huge amount of high volume transactions at low margins with a complicated flow of products in and out."

He said that while the Singaporeans were impressed with what Conduit was doing with its New Zealand customers, including Renaissance, Unisys, Fujitsu, Eagle Technology Group and the Fisher & Paykel Business Centre, they also wanted to see it working in Asia.

Conduit last week secured its first Singaporean customer, global plastics industry portal plasticscommerce.com.

Conduit chief executive John Hayson said his company would provide a transaction engine for the new client's sites.

It would also become the recommended supplier of e-business solutions to companies in the plastics industry.

"Plasticscommerce.com has an extensive range of suppliers and customers accessing its portals throughout Asia," said Mr Hayson. "It identified that a vast number of those needed help with electronic commerce.

"They were looking for something that could work easily with smaller customers.

"We have taken the view, going into the Asia-Pacific market, that we want to target small and medium business, companies with turnover of $US10 million to $US100 million, by having solutions which are scaleable, easily implemented and affordable."