#nasdaq

ARB Berhad is a Malaysian technology company that provides IT software and platform services and is listed on Bursa Malaysia. The company recently spin-off ARB IOT LTD (ARBB) and rasied USD 5 Millions IPO on Nasdaq. This event marks them as the fourth Malaysian issuer to list on Nasdaq since 2022.

What is Corporate Spin-Off ?

Corporate spin-off refers to the process of separating a subsidiary or division of a company into a new, independent entity. While the new entity operates independently, it is still managed by the same management team, and be allowed to present its financial information independently from the parent company.

Why ARB IOT Group Limited Spin-Off From Its Parent Company?

1. Drive Higher Stock Prices

Separating a subsidiary from its parent company enables investors to evaluate its financial performance and potential independently, leading to a potentially higher stock exchange valuation by eliminating the influence of the parent company’s other businesses.

2. Simplify Business Operations and Drive Greater Brand Success

By becoming an industry leader and focusing solely on its core business, it allows them to streamline their operations and improve efficiency and profitability. This creates an attractive proposition for new stakeholders and drives profits, without being hindered by unrelated operations

3. Unlocking Potential

Focusing solely on developing and commercializing a unique product or technology can enable a subsidiary to demonstrate its capability of successfully bringing innovative products or technology to market, which can attract additional investment and partnerships.

ARB IOT Group's CEO
Dato' Sri Larry Liew Kok Leong

According to ARB IOT Group’s CEO, Datuk Seri Larry Liew Kok Leong, the company intends to become the top IoT player in the ASEAN region, using its listing on NASDAQ to fuel its growth.

“We believe that being listed on NASDAQ, a globally recognized stock exchange, will not only leverage our listing status but also enhance our business profile and visibility.”

Additionally, he mentioned that ARB IOT Group will prioritize opportunities by focusing on strategic acquisitions to expand their international presence.

Corporate spin-off can be used as a strategy to explore other stock markets with various benefits. If you’re interested, please don’t hesitate to reach out and contact us !

US Stock Market Listing Seen As Growth Opportunity For ASEAN Firms

In February 2023, Bob McCooey, the Vice Chairman of Nasdaq, has expressed that ASEAN companies have the potential to flourish in 2023 by listing on the US stock market. He highlights that the region’s companies have seen substantial growth and have now achieved the necessary size and scale for US exchanges.

Challenges Encountered By ASEAN Corporations In Listing On The US Capital Market

However, there are challenges to listing on the US capital market, as outlined below:

1. Compliance With US Regulations

One of the biggest difficulties that ASEAN companies face when trying to get listed on the US stock market is that US authorities require them to follow strict rules and regulations. These include adhering to accounting standards that may differ from their home country, providing detailed financial disclosures, and following various corporate governance regulations.

2. Time And Cost

The process of getting listed on US stock market can be complicated and time-consuming that often requires the assistance of legal and financial experts. Small companies with limited resources may face even greater challenges in meeting the compliance of US stock exchanges and regulators.  In addition, the listing process can take several months or years, which may distract management from their daily operations, resulting in added expenses to hire professional help.

3. Time Zone Differences And Communication Barriers With US Service Provider

Time zone differences between ASEAN and the US may cause communication delays, slow response times, and limited availability of support from US service providers, which may ultimately cause listing process delays. Furthermore, language and cultural differences between ASEAN and the US could create communication barriers, increasing the complexity of the listing process. Ultimately, misunderstandings and errors may occur due to ineffective communication.

4. Limited Brand Recognition

It can be challenging for ASEAN-based corporations in attracting US investors as they may not be familiar with them. Furthermore, there may be a lack of understanding about the ASEAN region and its business practices, leading to mistrust and reluctance to invest. Therefore, additional marketing and advertising efforts may be required to build brand awareness and establish a positive reputation among US investors.

US Stock Markets Welcome ASEAN Companies For Listings

Despite the difficulties that may come with listing on the US capital market, US exchanges have been actively promoting themselves as destinations for ASEAN companies seeking to go public, as outlined below:

1. Streamlining The IPO Process Using Technology

US stock exchanges are leveraging technology to simplify the IPO process for foreign companies, with NYSE Connect being a prime example. This digital platform provides a range of resources and tools to simplify the IPO process. The platform offers market data, educational materials, and access to service providers, as well as a virtual roadshow tool that facilitates remote meetings with investors, making the process more efficient and cost-effective.

2. Cross-listings Partnership

Nasdaq has established an office in Singapore and collaborated with the Singapore Exchange (SGX) to promote cross-listings and attract ASEAN firms. This partnership allowing businesses to simultaneously list on both platforms, resulting in a larger investor base. In addition, ASEAN companies can also enjoy numerous benefits from this collaboration, such as improved access to capital, greater visibility, and increased liquidity.

3. Offering Regulatory Relief

To attract more foreign companies to list on US stock exchanges, the US government has offered some regulatory relief. As a part of this relief, some reporting requirements that are obligatory for US companies have been waived. This action simplify and reduce the cost of foreign companies’ entry to US capital markets, and therefore allow them to expand their global presence.

4. Provide Listing Programs

US exchanges have introduced programs to attract international listings, including ASEAN companies. The NYSE International Listings program provides dedicated support and guidance to companies navigating the listing process, while the Nasdaq International Designation program offers access to market intelligence and trading data. These initiatives can help companies overcome regulatory challenges and increase their visibility and investor base in the US.

Nasdaq Rolls Out Welcome Mat For Malaysian Companies

In October 2022, McCooey intends to encourage more Malaysian companies to list on Nasdaq, recognizing their potential to outperform in its extensive and diverse market. He emphasized that the combined value of all firms listed on American markets is more than 12 times that of the Hong Kong Stock Exchange, the biggest market in the area. This implies that Nasdaq has higher company valuations than other stock exchanges, which could potentially offer promising growth opportunities for Malaysian companies that aim to be listed on Nasdaq.

Highlight To Addentax Group Corporation (NASDAQ : ATXG)

In August 2022, our client, Addentax Group Corporation (NASDAQ: ATXG) has achieved a successful up-listing from OTCQB to Nasdaq Capital Market, with $25 million IPO raised. The company secured another $15 million in funding through a private issuance of senior with specific accredited investors within four months of its up-listing.

About Addentax Group Corporation (NASDAQ : ATXG)

Addentax Group Corp., founded in 2014 and based in Shenzhen, is a consulting firm that specializes in managing international supply chains for the textile and garment industry. It operates in two key areas: Garment Manufacturing, catering to wholesalers within China, and Logistics Services, offering delivery and courier services in specific provinces.

How Our Team Help Addentax Group During IPO Listing Process

1. Appointing US-based Auditor & Independent Director

Before Addentax Group was approved for listing on the US stock exchange, they were required to comply with certain regulations, including appointing an independent director based in the US and a US-based auditor with more experience and a larger team size to prevent mistrust issues. Our team helped the client by identifying a suitable audit firm and finding two trustworthy individuals who could serve as qualified independent directors, ensuring that they met all US regulatory requirements. This helped Addentax Group achieve compliance and gain approval for listing on the US stock exchange.

2. Providing Detailed Listing Timeline

The management of Addentax Group became distracted by the listing process, which prevented them from focusing on their daily operations and expanding their business. Besides, they overspent by engaging multiple service providers at the wrong timing. Our team provided a solution by creating a detailed listing timeline for the company. We advised them to engage suitable service providers at each specific timeline to ensure that they fulfill their responsibilities and avoid unnecessary costs. This approach allowed the company to manage their time and resources more effectively during the listing process.

3. Seamless Support Across Time Zones

Addentax Group, being an Asian company, faced various communication barriers such as language differences, diverse accounting standards, and limited knowledge of the listing process. Furthermore, the different time zones added complexity to the process, which had slowed down the listing process. Our team’s extensive experience in dealing with various service providers allowed us to overcome the communication barriers and streamline the listing process. Our expertise and professionalism assisted ATXG in promptly addressing important matters even under different time zones. Our efforts in this regard helped ATXG to avoid any potential regulatory issues, and ensured that all necessary disclosures were made in a timely and accurate manner.

4. Investor Relations Establishment

As Asian companies often struggle with limited brand recognition and reputation among US and global investors, it can be challenging for investors to identify the brand and IPO news of Addentax Group. We recommended that ATXG establish a suitable investor relations team and assisted them with matters related to IPO roadshows. This helped to increase the visibility and appeal of the company to potential investors, ultimately leading to increased investment in their business. Our efforts enabled ATXG to overcome the challenges of limited brand recognition and reputation, and successfully navigate the IPO process.

Addentax Group Corporation’s successful up-listing to the Nasdaq Capital Market and subsequent fundraising is a testament to their potential as a company, and our team’s ability to provide comprehensive solutions for clients facing common obstacles during the IPO listing process. By ensuring compliance with US regulations, managing time and cost, overcoming communication barriers, and enhancing brand recognition, we were able to support Addentax Group Corporation in achieving a successful IPO. We look forward to continuing to assist our clients in navigating the complex world of capital market regulations and IPO listing requirements.

Transaction Overview

Addentax Group Corp. stated that it has entered an agreement with certain accredited investors for a private issuance of senior secured convertible notes for $15,000,000 on January 4, 2023. The company will issue two senior secured convertible notes with an original principal amount of $8,333,333.33 for total gross proceeds of $16,666,666.66.

The company issued convertible notes at a 10% initial discount. The notes bear a 5% annual interest rate, and the Company will be required to pay instalment amounts or, at its option, redeem such amounts under the Notes each month beginning on the last trading day of the calendar month in which the control account trigger date occurs, and thereafter, on the last trading day of each calendar month until the maturity date of July 4, 2024, at which time all outstanding amounts remaining, if any, will be due and payable in full. Beginning after the original date of issuance, the Convertible Notes are convertible into shares of Common Stock at an initial conversion price of $1.25 per share. The company also granted warrants to purchase up to 16,077,172 shares of common stock at $1.25 per share.

The Notes, Warrants, and shares issuable upon conversion of the Notes and exercise of the Warrants are offered and sold in accordance with exemptions from the Securities Act provided by Section 4(a)(2) and Rule 506 of Regulation D established thereunder.

Hexcellence Consulting is proud to announce that our client, Addentax Group Corp. (NASDAQ: ATXG) has successfully up-listed to Nasdaq Capital Market from OTCQB on August 30, 2022, securing $25 million IPO. Addentax Group Corp. is the 8th Chinese issuer listed on US Nasdaq in 2022. 

ATXG engage Hexcellence Consulting 4 years ago for current reporting services, since then we have work closely to prepare for this moment.

Two IPOs went public in the week of August 29, 2022 led by Addentax Group Corp. (NASDAQ: ATXG), a garments manufacturer and logistic services provider in China, raised $25 million at a $158 million market cap and finished 92% above its IPO price.

Manufacturer of nicotine-free cigarettes made from hemp in United States, Hempacco Co., Inc. (NASDAQ: HPCO), raised $6 million at a $138 million market cap and finished 6% below its IPO price.

Two IPOs went public in the week of August 15, 2022 led by
GigaCloud Technology Inc. (NASDAQ: GCT), a wholesale marketplace operator for
furniture primarily manufacturing in Asia, raised $36 million at a $493 million
market cap and finished 292% above its IPO price.

Manufacturer of graphene products with development,
manufacturing and marketing in China and Hong Kong, Graphex Group Limited
(NASDAQ: GRFX), raised $12 million at a $79 million market cap and finished 0%
above its IPO price.

Three IPOs and four SPAC went public in the week of June 13, 2022 led by Lytus Technologies (NASDAQ: LYT) Indian provider of content streaming and telecasting services, raised $12 million at a $175 million market cap and finished 389% below its IPO price.

The one SPAC went public this past week are:

1.      Feutune Light Acquisition (no selected target industry)

Together, all the SPACs raised a total of $85 million.

One IPOs and one SPAC went public in the week of June 6, 2022 led by Phoenix Motor Inc (NASDAQ: PEV), a maker of electric vehicles and drive systems being spun out of SPI Energy, raised $16 million at a $155 million market cap and finished 57% below its IPO price.

The one SPAC went public this past week are:

1.      Acri Capital Acquisition (technology-enabled sectors in North America SPAC)

Together, all the SPACs raised a total of $75 million.

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