The Who’s Who of the Razer IPO

ipo razer razer inc stocks Sep 29, 2017

by: Tam Ging Wien

- A Glimpse into the Interconnected World of the Wealthy Asian Elites


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Razer Inc has been garnering a lot of attention lately. In July 2017 news broke that Razer was planning for a 2017 IPO. Later in Aug 2017, Razer CEO Tan Min-Liang had a short Twitter exchange with Singapore Prime Minister regarding rolling out a nationwide payment network.

With so much attention surrounding Razer, we decided to download a copy of its Application of Proof document from the Hong Kong Stock Exchange. You may download a copy from the following site:

We thought we were just doing a routine IPO analysis similar to the ones we covered for Netlink NBN Trust and Cromwell European REIT.

But pouring through the document, little did we expect to have found far more interesting information regarding the “Asian Elites” and how they are interconnected with one another.

In this post, we will highlight some notable names who have vested interest in the Razer Inc, names that will be familiar to most Asian readers such as Lee Hsien Yang, Li Ka Shing, Koh Boon Hwee, Wee Ee-chao, Robert and Michael Hartono & Vincent and Robin Tan.

But first, let’s talk a little about Razer and their Hong Kong IPO ambitions.

Razer Seeks to Float in Hong Kong

In various news sources, Razer was reportedly seeking to raise between US$400mil to US$600mil in an October 2017 IPO on the Hong Kong stock exchange and a target valuation of between US$3,000mil to US$5,000mil. The amount to be raised and valuation targets vary between reports.

Singaporean born Tan Min-Liang and American Robert Krakof founded Razer back in 2005 after they acquired the rights to the Razer brand from kärna LLC. Razer started off as a subsidiary of kärna LLC but after funding commitments fell through it exhausted its cash resources. Razer is headquartered in San Francisco, California. Today, Tan Min-Liang remains the CEO while Robert Krakof as President.

Starting from a humble gaming mouse, today, Razer’s core business is in the design and development of an integrated range of gaming hardware, software and services. In the Application of Proof document filed on the Hong Kong Stock Exchange, Razer calls itself a “leading global lifestyle brand for gamers”. Razer has expanded its portfolio to include laptops, desktops and specialised gaming peripherals such as keyboards and mice.

Beyond the gaming devices that Razer is already known for, it has also expanding its offering to include complimentary businesses:

  • Ouya – Razer acquired the software business of Ouya in 2015. Ouya was a Kickstarter funded project to develop an Android-based micro-gaming console.
  • THX – Founded by George Lucas in 1983, it develops the “THX” high fidelity audio/visual reproductions for movie theaters, home theaters, computer speakers and gaming console. Originally founded to ensure that the Star Wars soundtrack was accurately reproduced, it was later sold in 2002 to Creative Technology and later acquired by Razer in 2016.
  • Nextbit – Founded by ex-Google executives who worked on the Andriod platform, Nextbit began through a Kickstarter project in 2015, it developed the Robin smart phone and began order fulfilment in 2016. The smart phone sales were halted immediately after Razer acquired it in 2017. This acquisition triggered speculation that Razer had plans to introduce its own mobile device.

The Who’s Who of the Razer IPO

In the process of our analysis and financial teardown of Razer we noticed something interesting with regards to the shareholders. In pages 83 and 84, we found a very interesting and extensive list of early stage investors in Razer through its Series A through D fund raising.

Many names were instantly recognizable to us and we decided to put this out and share this interesting finding ahead before our analysis of the IPO. The names presented are selected based on likely interest to our readers, familiarity in Asia and ordered & grouped according to the ownership percentage found in the document.

Source: Razer Inc. Application of Proof Document

The stakes of the respective individuals, groups or entities below are listed in percentage (%) terms as noted in the document.

Basing on the reports that the targeted value for Razer is between US$3bil to US$5bil, we can therefore assume the value each 0.1% shareholdings equates to between US$3mil to US$5mil. As an example, if a shareholder has a 0.45% stake, that stake is valued between US$13.5mil to US$22.5mil.

Let’s start with the list of the notable shareholders.

Chen Family (Hivemind) Holdings Ltd and Members of the Tan Family - $1,254.3mil to $2,090.5mil

This is the controlling vehicle of Razer Inc. which is owned by Tan Min-Liang and his family and collectively control 41.81% of Razer’s shareholdings. The Chen Family (Hivemind) Holdings Ltd is an entity directly owned by the Chen Family Trust where various members of the family are beneficiaries.

Lim Kaling (林嘉林) - $880.5mil to $1,467.5mil

Mr Lim Kaling is a very low profile Singapore businessman with stakes in various investments in Singapore and Hong Kong. Very little is known about Mr Lim except that through various investment vehicles such as Lim Teck Lee Land Pte Ltd, Primerose Ventures Inc., Voyager Equity Ltd, Archview Capital Ltd and Sandalwood Associates Ltd, control about 29.35% of the shareholdings in Razer.

Mr Lim is a non-executive director of Razer’s board and is credited by Mr Tan Min-Liang along with Mr Koh Boon Hwee as a mentor; revealed in an interview with The Straits Times column “Lunch with Sumiko”: Razer founder Tan Min-Liang's 'insane drive to be the best'.

Lee Hsien Yang (李显扬) - $9.6mil to $16.0mil

Mr Lee Hsien Yang is a Singaporean business executive and the younger brother of current Prime Minister of Singapore Mr Lee Hsien Loong. Mr Lee held former executive and board positions in major entities including post of CEO of SingTel, Chairman of Fraser and Neave, Chairman of Civil Aviation Authority of Singapore (CAAS), Singapore Exchange among others.

Mr Lee is a Series A investor in Razer has presently holds 0.32% shareholdings.

Li Ka Shing (李嘉诚) (through Redmount Ventures) - $38.7mil to $64.5mil

Redmount Ventures is an investment company controlled by Li Ka Shing. Li Ka Shing the chairman of CK Hutchison Holdings is one of Asia’s wealthiest person probably needs no introduction. Through various ventures, his business empire spans real estate, development, telcos, utilities, infrastructure, retail and shipping ports.

Li Ka Shing through Redmount Ventures is a Series D investor in Razer and currently holds a 1.29% stake.

Vincent and Robin Tan (through Hotel Resort Enterprise Sdn. Bhd.) - $30.6mil to $51.0mil

Hotel Resort Enterprise Sdn. Bhd. is a company incorporated in Malaysia controlled by billion family Tan Sri Dato’ Seri Vincent Tan Chee Yioun (Vincent Tan) and his son Dato’ Sri Robin Tan Yeong Ching (Robin Tan).

Together, the Tan family control the Berjaya empire with business interest in construction, property, insurance, travel and various exclusive franchises in Malaysia such as McDonald’s and Starbucks.

The Tan brothers are an early stage investor in Razer with a 1.02% shareholdings.

Robert and Michael Hartono (through Davinia Investments Ltd) - $15.0mil to $25.0mil

Davinia Investments Ltd is indirectly controlled by the Chinese Indonesia tobacco billionaire brothers Robert Budi Hartono and Michael Bambang Hartono who owns the privately held Djarum Group.

Djarum is reported to be the 3rd largest third largest maker of clove cigarettes in the world. Besides tobacco related products, the brothers also control Bank Central Asia (BCA) – the largest Southeast Asia lender by value.

Through Davinia Investments, the Hartono brothers have a 0.5% stake in Razer invested during the Series B funding round.

Koh Boon Hwee - $64.5mil to $107.5mil

Mr Koh Boon Hwee is prominent Singapore businessman who serves as a director, chairman and investor in various capacities in a variety of businesses. He is best known for being the Chairman of Yeo Hiap Seng and Far East Orchard, Singapore Telecom Group (before being rebranded SingTel), DBS Bank and SIA Engineering. He also holds board positions in Agilent Technologies, Temasek Holdings among others.

Mr Koh and 5 other partners namely Dr Henry Tay Yun Chwan, Mr Wee Ee-chao, Dr. Loo Choon Yong, Mr. Loh Kim Guan and Mr. Low Check Kian are equal shareholders in Pi Holdings Limited. Pi Holdings Limited has a 1.25% shareholdings in Razer.

Mr Koh Boon Hwee himself is an early investor in Razer and has a further 1.90% personal stake.

Wee Ee-chao - $7.5mil to $12.5mil

Mr Wee Ee-chao is the Chairman and Managing Director of UOB Kay-Hian Holdings Ltd and is the son of the former United Overseas Bank (UOB) Chairman and CEO Wee Cho Yaw. The Wee family interest spans a large number entities such as UOB Bank, United Industrial Corporation (UIC), United Overseas Land (UOL), Pan Pacific Hotels Group and Haw Par Corporation.

Mr Wee is a Series A investor in Razer through Pi Holdings Limited.

Loo Choon Yong - $7.5mil to $12.5mil

Dr Loo Choon Yong is the co-founder and Executive Chairman of the Raffles Medical Group (RMG). RMG’s is a healthcare company which owns and operates hospitals, specialist centres, a network of family and dental clinics and insurance services. They operate across Asia namely in Singapore, China, Japan, Vietnam and Cambodia. RMG’s flagship asset is the Raffles Hospital in Singapore.

Mr Wee is a Series A investor in Razer through Pi Holdings Limited.

Henry Tay Yun Chwan - $16.8mil to $28.0mil

Dr Henry Tay Yun Chwan in the Executive Chairman of The Hour Glass Ltd, a listed luxury watch retailer on the Singapore Exchange. He also owns a significant stake in the competitor Cortina Watches Ltd.

Mr Wee is a Series A investor in Razer through Pi Holdings Limited.

Low Check Kian - $7.5mil to $12.5mil

Mr Low Check Kian in an investor and holds board positions in SingTel and NTU Board of Trustees.

Mr Wee is a Series A investor in Razer through Pi Holdings Limited.

Chandra Mohan s/o Rethnam - $21.9mil to $36.5mil

Mr Chandra Mohan s/o Rethnam is a partner is renowned Singapore legal firm Rajah & Tann and heads the Commercial Litigation and Private Client department. Mr Chandra is also a Non-Executive Independent Director on the board of Centurion Corp.

Mr Chandra is a Series A investor in Razer and has since increased his stake in Razer through the Series B and Series D funding rounds. His current stake stands at 0.73%.

Wong Kok Hoe - $12.3mil to $20.5mil

Mr Wong Kok Hoe is the Non-Executive Chairman of Centurion Corp. with business focused on workers accommodation assets in Singapore and Malaysia.

Mr Wong is a Series A investor in Razer with a stake of 0.41%.

Low Kim Kang, David - $10.8mil to $18.0mil

Mr Low Kim Kang, David is the Non-Executive Director at Centurion Corp. with business focused on workers accommodation assets in Singapore and Malaysia.

Mr Low is a Series A investor in Razer with a stake of 0.36%.

Temasek Holdings (through Orchid 1 Investments Pte. Ltd.) - $43.5mil to $72.5mil

Orchid 1 Investments Pte. Ltd. is an investment company which managed by Heliconia Capital Management Pte. Ltd. and is a wholly-owned and controlled by Temasek Holdings, the Government of Singapore’s investment company.

Temasek manages a portfolio of approximately $275bil and is wholly owned by the Ministry of Finance.

Heliconia Capital funds Singapore based high potential growth companies typically in the small and medium-size enterprises (SMEs) in order to assist them in becoming globally competitive companies.

Both Orchid 1 and Heliconia has been involved in a number of IPOs most notably Jumbo Group.

Orchid 1 is a Series B investor in Razer with a stake of 1.45%.

Intel Corporation (through Middlefield Ventures Inc) - $10.2mil to $17.0mil

Middlefield Ventures Inc. wholly-owned subsidiary of the chip maker Intel Corporation.

Middlefield Ventures is a Series B backer in Razer with shareholdings currently at 0.34%.

Foxconn Technology Group (through Strength Luck Limited) - $9.6mil to $16.0mil

Strength Luck Limited is an investment vehicle of Hon Hai Precision Industry Co. Ltd which trades as Foxconn Technology Group on the Taiwan Stock Exchange. Hon Hai is well known as one of the main contract manufacturers of the iPhone for Apple.

Strength Luck Limited is an early stage investor in Razer and subsequently increased its investment through the Series D funding. Its current shareholdings stand at 0.32%.

A Brief of Razer’s Financials

We summarise Razer Inc’s financials here for easy reference to those interested in their financial performance.

Source: Razer Inc. Application of Proof Document

While Razer has certainly been showing growing revenues over the years, those increase in revenues failed to materialise into profits. It has a respectable gross profit margin, but owing to high expenses in marketing, R&D and administrative it clocked 2 consecutive years of losses prior to the IPO.

Razer has little debt on its books, majority of its liabilities are Trade Payables of US$160.8mil representing 95.5% of its liabilities in 2016. Trade Receivables also swelled from US$66.3mil in FY2014 to $101.0mil in FY2016. Trade Receivables are nearly 32% of its assets. It does seem like Razer has a problem collecting its payments and as a result, drag out payments to its suppliers in order to manage their working capital.

We observe that Razer has poor cash flow, poor free cash flow, high uncontrolled expenses and an inability to collect cash on its receivables.

We are awaiting more information with regards to Razer’s full IPO Prospectus and will be interested to cover it on our blog as more information becomes available.

Based on the financials we see at this moment, our first impressions of Razer Inc’s IPO is certainly blunt.

However, knowing the who’s who of the Razer investors, perhaps this IPO will likely garner significant interest among the public and would trade at a premium when it list in Hong Kong.

For those who are interested to read further, we have curated other sources with regards to the Razer IPO:

 


Disclosure Statement

The views and opinions expressed herein are those of Tam Ging Wien (“the author”) and do not necessarily reflect the official policy, position or view of the author’s employer, organization, committee or other group(s) or individual(s).

The author does not have enough information to determine an intention to subscribe to the Hong Kong Public Offer of Razer Inc as of the date of this posting.

The author at time of writing does not hold any stake in Razer Inc.

The author does NOT claim the ownership of the images used.


 

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