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The strange IPO of Jonathan Rowland’s “bitcoin bank”



You might remember a story we wrote in September about a new “bitcoin bank” with aspirations to become a challenger to Monzo.

Mode, headed up by serial hype-meister entrepreneur Jonathan Rowland, was planning a £40m float on the London Stock Exchange, which came to fruition on Monday. Rowland, as it turns out, is the son of the property tycoon, Tory donor David “Spotty” Rowland (who’s also mates with Prince Andrew). So it’s safe to say he has friends in high places.

We suggested that this “bitcoin bank” was in fact not really like a bank at all, but rather just another high risk crypto start-up with no distinguishing features, and seemed to us just the latest in a succession of attempts by Rowland to clamber on to a bandwagon (before crypto there was the dotcom bubble, social media and digital banking).

Suffice to say, our Jonathan, Mode’s chairman and CEO, was not best pleased with the piece, as he let us know in no uncertain terms via Twitter (he deleted the tweet once we had retweeted it but here’s a screenshot):


In the press release confirming Monday’s listing on LSE, Rowland was quoted thus (emphasis ours):

The Mode offering was oversubscribed and well supported by existing investors and a range of new institutional investors. Today marks a pivotal moment for Mode, as one of the first publicly listed financial services companies with a consumer focused-digital asset offering to list on the LSE Main Market. Mode’s admission is a vote of confidence in our business strategy and our mission to reduce fragmentation and inefficiencies across the banking, payments, investment and loyalty industries.

Alex Rvykin

But some other rather interesting details were kept out. Anyone who managed to make it to page 112 of the Mode IPO prospectus, which the company released in the late-afternoon last Wednesday, might have been intrigued to come across this under “Other Information”:

Mode Global has received a claim from a former contractor which is for a monetary sum in lieu of notice and fees equal to £90,258. The contractor is also claiming that he was offered 10% of the share capital of Fibermode Limited. Mode Global refutes each of these claims in the strongest of terms.

They might have wondered who this apparently deluded former contractor was. A disgruntled builder, perhaps? A cleaner? Security guard? Well not quite. It turns out the contractor in question is in fact the company’s former CEO, a Russian national called Alex Ryvkin, who is even named elsewhere in the prospectus as not just a mere former contractor, but a director:

Funny they didn’t feel inclined to specify.

According to Companies House filings, Ryvkin was in fact only officially a director for less than three months, between May and August 2019 (the company was at that point formally called R8 Ltd, though in a press release from May 2019 Ryvkin is named as CEO of Mode).

Ryvkin did indeed begin as a mere contractor, in May 2018, but according to his claim, was made CEO in November 2018 of Mode subsidiary Fibermode Ltd, its operating company. He alleges he was wrongfully dismissed, in July 2019, and says he is contractually owed £27,258 in unpaid salary; £60,000 for his notice period; and around £3,000 for accrued but untaken holiday allowance. He also says Mode has breached an oral contract in which he was promised a 10 per cent stake in the company.

Mode, per its prospectus, refutes all these claims “in the strongest of terms”. The company declined to respond to our request for further comment on this.

The “oversubscribed” IPO

Another slightly odd thing is that Mode’s “oversubscribed” market offering with its “range of new institutional investors” does not seem to have included many new investors at all. In fact the only new significant shareholder without an obvious link to the company is Premier Miton, which according to the prospectus has invested just under £1.8m of the £7.5m raised in the IPO. Here are the top shareholders, according the prospectus:

As you can see, the top shareholder after Jonathan Rowland is Ruskin Capital, which as you can see in the small print is Jonathan’s father, old Spotty. Aside from Premier Miton, the other new investors are Keve Family Ltd Partnership which, again per the small print, is connected to Mode director Ryan Moore, and then Liwathon Limited and Linley Limited. Both of these are registered to the same Mayfair address, according to Companies House, and their directors include various Rowland family members. Together, these three new investors account for about £4m, with Jonathan and Spotty’s additional investments amounting to £1.5m between them. So that’s £5.5m from investors with direct links to the company’s directors, in a £7.5m raise.

When The Telegraph reported on Mode’s plans to list last month, they mentioned that Christopher Isaac “Biz” Stone, was an investor in the company (what is it with obscure British start-ups bringing in Twitter-Big-Dogs-with-three-letter-pseudonyms ending in Z?) The billionaire’s investment can’t be very large, however, as he is not listed as a significant shareholder.

And if you tot up the new shares issued to the top shareholders in the table above, you get to about 17m. Only 15m new shares were issued, so there must have been some share sales as well as purchases.

All of this has got us wondering: why did Mode bother to IPO at all? The cost of the listing, according to its prospectus, was north of half a million pounds. Was this some kind of vanity project, or why did they decide to go public? And quite how “oversubscribed” was this IPO?

We have asked the company about this too but they have so far declined to comment. We will update the story if we get any further details — either via our inboxes, or via deleted tweets.

Related links:
About Johnathan Rowland’s “bitcoin bank” — FT Alphaville
A company for carrying on an undertaking of great advantage’ — FT Alphaville
This is nuts, when’s the crash? — FT Alphaville
Jellybook posts £300,000 loss — FT

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Singapore offshore-listed companies consider ‘homecoming’ flotations




Some of Singapore’s largest offshore-listed companies have considered whether to hold “homecoming” share sales in the city-state after approaches from its stock market and investment bankers.

The talks, which followed a recent wave of homecoming listings by Chinese technology companies in Hong Kong, would provide a boost for the south-east Asian nation’s bourse, the Singapore Exchange.

Singaporean companies that have discussed the move include Sea, an internet company that listed in New York in 2017, ride-hailing and food delivery app Grab and Hong Kong-listed gaming group Razer, according to several people familiar with the talks. Grab is separately listing via a special purpose acquisition company, or Spac, in the US.

The homecoming listings in Hong Kong were driven by political pressure from the US, but they have allowed the groups to raise large amounts from investors closer to their China headquarters.

SGX’s equity trading business, meanwhile, has been hurt by a series of accounting scandals that have led to delistings as well as low trading volumes.

It has struggled to attract tech names despite partnerships with the Nasdaq and Tel Aviv exchanges and has looked for other routes to grow, including a proposal to become the first bourse in Asia to allow Spac listings.

A US investment banker in Singapore said: “Historically the idea you could do meaningful local listings was only possible for a very select group, but that has changed dramatically in the last couple of years. The homecoming exercise in Hong Kong has created a huge amount of extra liquidity for those companies.”

SGX told the Financial Times it had seen “increasing interest in our secondary listing framework as companies see the value of being listed closer to home”.

However, one senior investment banker said the SGX’s small size meant secondary listings there “make little sense from a capital markets perspective but there may be political pressure”.

The market capitalisation of Singapore’s equity market totalled about $690bn at the end of April — equivalent to about one-tenth of Hong Kong’s $6.9tn market, according to FT calculations based on figures provided by the exchanges.

Sea, whose market value of $145bn makes it larger than most US tech stocks, has been approached by SGX and bankers about a possible dual listing, according to a person familiar with the matter.

The company has talked to its bankers at Goldman Sachs about whether to explore such a deal, according to a second person. Sea and Goldman declined to comment. 

SGX has approached a string of other high-profile foreign-listed companies, according to a senior investment banker in Singapore familiar with the matter.

Grab, south-east Asia’s answer to Uber, has looked into whether to carry out a secondary listing in Singapore after it completes its $40bn Spac deal to list on Nasdaq, according to two people close to the matter.

The ride-hailing giant, whose backers include Singapore state investment fund Temasek, said: “We’ve explored opportunities in south-east Asia, but do not have plans for a secondary listing now.”

Hong Kong-listed Razer, which sells video game electronics, is in talks with banks about listing on a second exchange, according to two people familiar with the matter.

South-east Asia has benefited as international investors diversify away from China amid geopolitical tensions with the US, and following growth in its tech and consumer sectors. 

David Biller, head of investment banking for south-east Asia at Citi, said countries such as Indonesia, Malaysia and Thailand were “now at the forefront of investable growth in the region away from China and India”.

Martin Siah, head of south-east Asia global corporate and investment banking at Bank of America, said it had been a “breakout year” for investment banking activity in south-east Asia, particularly in Thailand and the Philippines.

This year, investment bank fees from deals in countries in the Association of Southeast Asian Nations, whose largest markets are Singapore, Indonesia, Thailand, Malaysia and the Philippines, are at a near-record level of $175m, according to data from Dealogic.

Additional reporting by Hudson Lockett in Hong Kong

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Electric vehicle Spacs: Lordstown hits its city limits




If Lordstown was one of its own electric pick-up trucks, it would have conked out a couple of feet from the charging point. The US group has warned it could fail as a business, running out of cash before even starting commercial production.

Lordstown only listed via a $1.6bn Spac takeover last October. The wheels are coming off fast. That confirms the weakness of the business models of many electric vehicle companies. US markets exuberantly chose to overlook these when the groups listed, excited by the overblown forecasts permitted once a company lists via a takeover by a special purpose acquisition vehicle.

A two-thirds collapse in Lordstown’s shares since February is further validation for Hindenburg Research, which last year took a successful swipe at electric freight truckmaker Nikola. The short seller questioned Lordstown’s sales figures in March. Last month, the company said production of its $52,500 Endurance pick-up truck this year would be “at best” just half prior expectations of 2,200 units.

At least 18 electric vehicle and battery companies went public via Spac deals from the start of 2020, raising a combined $6.6bn from investors, according to Refinitiv. Few of these companies generate significant revenues. Many of them have missed targets.

Shares in Canoo are more than 50 per cent below a December peak after ditching many of its goals. XL Fleet has lost even more of its value after it abandoned guidance for 2021 revenue.

Traditional automakers have rebounded. General Motors shares are up by a half since the start of the year, for example.

The Spac listing process is partly to blame for over-promising by EV makers. It enabled them to publish very optimistic financial projections, compared to what is permitted in a traditional IPO.

Investment often involves backing what sceptics see as a long shot. Tesla took years to hit production targets and turn a profit. The added problem for investors now is that EV production has become a crowded field. Heavy research is required to identify a hot prospect among the no hopers. Extra scepticism applies to businesses listed via a Spac.

The Lex team is interested in hearing more from readers. Please tell us what you think of Lordstown and other EV Spacs in the comments section below.

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Shares in group linked to China’s Three Gorges Dam surge on debut




China Three Gorges Renewables Group’s stock surged by 44 per cent on its debut after the company raised $3.6bn in China’s largest initial public offering of 2021.

Shares in the renewable energy arm of China Three Gorges Corp, the state-owned company that lends its name to the hydropower dam on the Yangtze river, shot up the maximum daily amount permitted by the Shanghai stock exchange on Thursday.

The group raised Rmb22.7bn ($3.6bn) in its IPO, the largest equity debut in the country since a $7.6bn share sale by China’s biggest chipmaker, Semiconductor Manufacturing International Corporation, last July. The first day jump pushed the company’s market capitalisation to $17.1bn, according to Bloomberg.

The day one pop for China Three Gorges Renewables, which also has interests in wind power, came as China faces a sharp rise in the cost of coal-fired power.

The move reflected strong appetite from Chinese investors for green energy assets as Beijing seeks to make wind a far greater contributor to the country’s electricity output, said Bruce Pang, head of research for investment bank China Renaissance.

“It’s not just a trend in China — it’s a trend across the world,” Pang said.

Demand for shares in the IPO outstripped supply 78 times, according to the company.

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The group will use part of the share sale proceeds to cover almost half the cost of seven offshore wind turbine projects, as it and other renewables companies rush to complete infrastructure before government subsidies expire at the end of the year.

“We anticipate China Three Gorges will strive to finish the projects this year in order to receive the subsidies,” said Apple Li, a credit analyst at S&P Global Ratings.

The credit rating agency said this week that the IPO would provide a significant injection to the balance sheet of parent group China Three Gorges as the subsidiary pursues an “ambitious non-hydro renewables development plan” over the next few years.

China Three Gorges Renewables on Tuesday launched its first floating offshore wind power platform off the coast of Zhejiang province in south-eastern China. The company said the platform could deliver “green and clean energy for 30,000 households a year”.

Unlike fixed wind turbines, which can only operate in shallow waters, floating turbines can generate electricity further offshore, harnessing the power of stronger ocean winds. 

In September, China committed to achieving carbon neutrality by 2060, but its industry-fuelled recovery from the Covid-19 pandemic has put pressure on its environmental ambitions. In 2020, it produced record amounts of steel and increased approvals for new coal plants.

Research last year led by Wang Muyi, an analyst at UK think-tank Ember, found that new wind, hydro, solar and nuclear energy investments could not keep up with a sharp rise in electricity use in China between May and October.

The country is also suffering from a shortage of coal as industrial activity booms, pushing up prices. Last month, a state council meeting chaired by Premier Li Keqiang emphasised the need to further tap China’s “rich coal resources”, but added that the capacity of wind, solar, nuclear and hydropower would be increased to ensure energy supply this summer.

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