Former Yangzijiang Financial CEO Vincent Toe’s ICH Group seeks to give Singapore’s small and mid-cap IPO market a leg up

[SINGAPORE] Vincent Toe, the former chief executive of Yangzijiang Financial, understands the challenges that companies with small-to-mid market capitalisation face when they attempt to get listed.

During his tenure at Yangzijiang Financial, Toe too faced an uphill task as the company’s shares underperformed, partly due to market conditions at the time.

Reaching out to investors, particularly for non-index stocks, was difficult, he said.

Now, Toe – as co-founder of local investment holding group ICH Group and managing director of its subsidiary ICH Asset Management, a Singapore-based fund management firm – is betting on small to mid-cap stocks to drive growth on the Singapore Exchange (SGX).

“That is where the market opportunities are because these companies need a lot of attention, unlike the big ones,” Toe said in an interview with The Business Times.

He explained that small to mid-cap companies require significant handholding, from getting their internal processes in order to becoming familiar with listing requirements and engaging investors more closely, which helps to justify ICH’s role.

The group recently served as the key anchor investor in the initial public offerings (IPOs) of Lum Chang Creations, Info-Tech and Goodwill Entertainment, ushering in a much-needed burst of listing activity in the local market.

This direct investment is part of its broader strategy to channel capital into Singapore’s high-growth small- and mid-cap firms.

Since its founding in 2000, with early backing from EDB Singapore, ICH has invested in and advised more than 200 SGX-listed companies across sectors including technology, healthcare, sustainability and consumer services. The firm and its partners have deployed more than US$1 billion locally and internationally.

SGX has welcomed growing support from participants such as ICH Group as it rolls out initiatives to deepen liquidity and activity in the market.

“This all-hands-on-deck response reflects the shared commitment across the ecosystem to catalyse greater activity and deepen liquidity in our securities market,” said Koh Jin Hoe, head of capital markets, global sales and origination at SGX Group.

For Toe, the current market momentum echoes the opportunities and challenges he has seen over the years.

He has more than 25 years of experience across senior investment banking roles at UBS, DBS and JPMorgan, as well as a period as a fund manager at GEM. In addition, he has served as an independent non-executive director and chaired audit committees for several listed companies.

Longer-term view

ICH often takes the role of lead investor to help get IPO deals moving, said Toe. The company sometimes buys into a lead position as a show of goodwill, creating momentum for others who may be hesitant to commit until a lead is established.

“Personally putting our name on it helps the market to go beyond,” he said, adding that the company is taking a longer-term view of certain companies.

By doing so, ICH provides an added layer of due diligence assurance, giving the market greater confidence. This creates both an endorsement effect and a leadership effect, particularly in situations where investor sentiment is cautious.

One of the most notable examples was Yangzijiang, which ICH Group supported in 2007 by providing equity and strategic advice, and helping the firm navigate the niche financing channels of the shipbuilding industry.

Toe shared that during the financial crisis, the company’s shares were undervalued for a period, and ICH helped unlock value by supporting a dual listing in Taiwan, which boosted its market capitalisation by more than 30 per cent as Taiwanese investors recognised its true worth.

Toe explained that the market had undervalued Yangzijiang because of its financial business, with many investors assuming it was burdened by bad loans. To address this, ICH Group proposed separating the company’s businesses and played a pivotal role in the strategic spin-off of Yangzijiang Financial.

At that time, the combined entity was valued at about S$1.20 per share, but after the separation, the shares of the two entities together to-date traded at around S$4. This represented more than a threefold increase in market capitalisation, achieved largely by separating the businesses and allowing investors to better recognise the value of each.

Today, Yangzijiang Financial is proposing to spin off its maritime business, YZJ Maritime Development, for the same reason. This is due to investors’ general dislike for conglomerates, Toe said.

“What we have helped here is getting the right structure to market – but we also support the company along the way by bringing in investors,” he added.

With the help of agencies, ICH connects companies with institutional investors through constant engagement, taking the lead by co-investing alongside them.

He noted that small and mid-cap firms eyeing a listing must secure sufficient funds not only to scale but also to cover listing expenses. Once these hurdles are cleared, they are in a much stronger position to go public.

Bull market

Toe believes that significant opportunities lie ahead for the local equities market.

“The Singapore market is undervalued as there is money to be made, and we will enter into a bull market soon,” he said, adding that it is the right time to take position.

“We want to be a player in this market, to anchor good news, and take a longer-term deal,” he added.

By stepping in as an anchor investor, ICH aims to signal confidence to the market, Toe said.

He hopes ICH can encourage other investors to participate in such deals. For example, in Goodwill Entertainment’s IPO, ICH’s involvement helped bring in two additional investors, allowing the deal to be completed quickly.

Toe noted that companies typically approach ICH through banks and underwriters. He emphasised that while the regulatory process in Singapore is relatively straightforward, the marketing process can be uncertain, especially for small-cap firms.

This makes careful selection critical, as ICH’s primary objective is to generate returns by backing companies with strong potential.

“For small-cap companies, there is not much research coverage, making it difficult for investors to access information,” he said.

Looking ahead, ICH plans to continue anchoring upcoming IPOs. The immediate pipeline includes a company in the auto sector, expected in September, and another in the co-living sector, which should lodge its prospectus by this quarter.

“Some are trying to rush for this year, but you will see a lot in the first quarter of next year,” Toe said, adding that a food manufacturer’s IPO could take place between this quarter and the next.