Interview: Singapore Prime Platform For Israel's TRENDLINES

ISRAEL'S No.1 INCUBATOR of cutting-edge private startups, The Trendlines Group Ltd (SGX: TTGL), naturally at first gave thought to a domestic listing in Tel Aviv, and later called off its own bid to go public on the Toronto bourse before eventually settling on Singapore in November of last year - and the listco has never looked back, an executive told Asia Fund Space.

The Trendlines Group launched its IPO on the Singapore Exchange's Catalist board on November 26.

The medical and agricultural technology enterprise incubator firm originally planned to offer 75.76 million shares priced at 0.33 sgd per share, with management expecting to raise 25 million sgd in gross proceeds, being priced at around 1.4 times its price-to-book ratio of net tangible assets value as of June 30.

The proceeds forecast was spot on, and when adding in 13.7 million sgd in pre-IPO investment, total IPO-related financing topped off at 38.7 million, with management saying at the time that investor interest "significantly exceeded" the number of shares on offer.

The Tel Aviv 100 Index - a total return index - is currently trading down 13% from year-earlier levels.

That was one of the factors encouraging Trendlines to look elsewhere for its IPO platform.

"We basically ruled out Nasdaq because though it's a tech-friendly board, we were simply too small at the time and we couldn't generate sufficient analyst and financial media coverage, and we also took a look at London and Australia.

"And then we turned to Toronto but ended up pulling the IPO plug there 24 hours away from our scheduled launch because we weren't confident we could make decent proceeds," Trendlines Chairman & CEO Mr. Steve Rhodes told Asia Fund Space.

This made Singapore a logical next consideration, which is geographically on the same continent as Trendlines home base - Israel.

"So we ended up shifting our focus to Asia, and we spent a week in the city state with bourse officials and banks and were very impressed, mainly with the usual attributes including the corruption-free operating environment.

"At the time, I think we can say that the level of scrutiny and due diligence we underwent over that busy week made us a bit crazy, but it solidified our confidence in their vetting process, criteria and standards," Mr. Rhodes said.

He said that following the grueling week of meetings and negotiations, Trendlines ended up choosing Prime Partners for its capital financing needs.

"Prime Partners continues to be our chief sponsor and we maintain regular contact with them, and they've locked into their shareholding."

Mr. Rhodes, who began his financial career in Chicago, offered a telling antidote on the difference between IPO processes in Toronto and Singapore.

"Our final Toronto IPO prospectus was a mere 150 pages, but by comparison, our Singapore IPO prospectus was more than four times that with over 600 pages.

"I think that says it all," he told Asia Fund Space.

The Singapore-listco's dual focus on medical and agricultural tech startups wouldn't be undergoing any major alterations anytime soon.

"We have no plans to expand into other sector, though in agricultural technology we may look at broadening out intra-sector.

"And as for medical technology, we also might expand to other medical areas but we'll only target medical devices and no pharmaceuticals," Mr. Rhodes added.

Overall, Trendlines had 47 startups in its portfolio and would target 8-10 new additions per annum.

"That's our goal for now, and we also practice extreme due diligence, only opting to invest in 2% of the 500 or so companies we look at every year.

"We're also in the process of opening an incubator in Singapore as we've been very happy with things there are we're also eager to expand our business in China," he said.

Trendlines must have carved out the right business model because they've twice been named at the best incubator in Israel by the government.

"Adding startups to our portfolio is all about lowering risk."

Arguably one of the flagship firms in its startup portfolio is Eden Shield - an innovative agricultural tech firm that specializes in an environmental-friendly non-pesticide based pest repellent technology that uses odor-masking around crops that keep insects away.

"The technology has been very successful and keeps out the bugs while also holding up well in heavy wind conditions.

"And the products are their own best marketers as when pests are repelled by the Eden Shield meshes, they end up flying off to neighboring farms without these products, thus spreading by word of mouth the benefits of Eden Shield across the countryside."

In the nine years of running incubators (Trendlines was founded in 2007 and listed in November of last year) the northern Israel-based firm has already notched up 47 portfolio firms with six exits through trade sales in as many years, as well as two public listings.

More impressive were the returns that investors enjoyed, ranging from 3.2X to 8.8X, and in one extraordinary case - 66.9X - with Trendlines in currently in talks for a few more potential exits.

The Trendlines Group Ltd is a technology commercialization company that creates and develops companies to improve the human condition. The Company invents, discovers, invests in, and incubates medical and agricultural technologies. Trendlines Group is involved in all aspects of its portfolio companies from technology development to business building.The Trendlines Group, established in 2007, specializes in the commercialization of innovation. It is headquartered in Israel --recognized worldwide as a"Start-Up Nation." 

Steve Rhodes is chairman and CEO and is responsible for the overall management of the Group's business operations (particularly, in the areas of finance and compliance reporting functions) and is primarily responsible for the establishment of strategic partnerships in Europe and the United States. Steve is also the chairman of Trendlines Agtech where he manages and provides leadership direction in regard to day-to-day operations.Steve began his career with the Chicago branch of Bank Leumi where he advanced through a number of financial marketing and lending positions, including director of marketing. He continued with Bank Leumi in Israel when he became deputy manager of Bank Leumi's International Division. In 1988, Rhodes joined SRD Medical. After serving as its CFO, he became VP sales and marketing. The longstanding partnership with Todd Dollinger, The Trendlines Group's co-Chairman and co-CEO began in 1993, when they cofounded the predecessor to Trendlines. In 2004, Steve became the CEO of the Misgav Venture Accelerator (now Trendlines Medical), focusing the incubator's innovation efforts on the life sciences, particularly medical devices. Steve serves as director and chairman of the board on a number of our Group's portfolio companies.
 
(Note: This story is contributed by Andrew Vanburen. Mr. Vanburen has served as a
government official focused on international trade at the American Institute of Taiwan in
Taipei, and worked in financial journalism for nearly a decade in both Beijing and
Shenzhen. He holds a Master's Degree from New York University. He is currently Director at
Hong Kong-based Asia Fund Space. For more information, please visit:
www.asiafundspace.com)