SINGAPORE (May 8): Things aren't going well at trading platform Ayondo. And that is an understatement.
Barely a year after its IPO, losses have mounted at the fintech firm, and its CEO and founder Robert Lempka has left in huff. Lempka has since filed a claim against the company for unpaid money.
Two other C-suite executives – CFO Richard Fulton and CMO Sarah Brylewski – have also left, within a span of nine months.
Meanwhile, Ayondo’s share price has collapsed, and trading in the counter remains suspended.
See also: Another one bites the dust at Ayondo – this time the chief marketing officer
And now, it wants to go ahead and sell away its key operating subsidiary, Ayondo Markets Limited (AML), despite warnings from SGX RegCo that conditions including capital requirements have first to be confirmed to have been met before the deal is deemed completed.
As AML deals in CFDs (contracts for difference) and spread betting business activities which are regulated by the Financial Conduct Authority (FCA), the subsidiary is required to maintain a Common Equity Tier 1 (CET1) ratio.
With its ire drawn, the market regulator is now launching a deep probe on the company.
“We are greatly concerned about the turn of events at Ayondo which surfaced less than a year after its listing,” says SGX RegCo spokersperson on May 8.
“We will therefore undertake a thorough review of what transpired at IPO and after listing. Should we find any breach of the Listing Rules or other regulations, we will act, including referring the matter to the relevant statutory authorities,” the spokesperson adds.
SGX’s strong words were triggered by Ayondo’s filing late in the evening of May 7, indicating that it wants to go ahead with an agreement to sell AML, which it owns 99.9% of, to Netherlands-registered BUX Holdings for £5.7 million ($10.2 million). Ayondo says it will meet the required approvals.
AML and BUX have an existing relationship. AML offers its trading platform to BUX under a white label arrangement.
Before this latest episode, Ayondo had already been squarely in SGX RegCo’s sights. In a Notice of Compliance issued on Apr 16, the company was made to meet a long list of conditions before the proposed sale of AML could go ahead.
Ayondo claims that, over the past year, tighter regulations in Europe and UK, coupled with unfavourable market conditions, have caused AML’s business of providing CFD trading to deteriorate.
The company offers so-called “social trading” platforms as well. It allows clients to “follow the leader” by mimicking trades made by them.
Ayondo hopes that by selling AML, it can focus its energy on growing the social trading platforms instead. The company claims growing interest in this way of trading shares, including in Asia.
On May 2, the company reported losses of 50.2 million CHF ($67.1 million) for the year ended Dec 31, 2018 – a more than four-fold surge from losses of 9.75 million CHF for FY17.
The bulk of the losses can be attributed to an impairment of 37.1 million CHF. Revenue between FY17 and FY18 was flat at 20.8 million CHF.
On Apr 26, one week before the full year earnings was announced, the company’s former CEO, Lempka, filed a claim with Singapore’s State Courts for $165,800 due as part of his termination agreement. He quit on Jan 22.
The company went public on Mar 18, 2018. It sold a total of nearly 81 million shares at 26 cents each, raising gross proceeds of $21 million.
The issue was handled by UOB Kay Hian. Pheim Asset Management was the top subscriber for the IPO shares.
Trading of Ayondo shares was suspended on Jan 30. It last traded at 4.8 cents.
As at Dec 31 2018, the company’s net asset value was negative 0.02 CHF.
