Bourse with strong retail capacity a key element in IPO: Lavinia Koh, MyRepublic

Lavinia Koh, CFO of MyRepublic.

Lavinia Koh, the group chief financial officer (CFO) of Singapore-based telecoms operator MyRepublic since April 2016, and a Fellow of the Institute of Chartered Accountants, England & Wales, intends to take a calibrated, measured approach to MyRepublic’s growth and public listing plans in 2018.

Koh, whose career spans financial leadership roles in the telecommunications sector in Singapore and the UK, having served at Cable & Wireless Worldwide and Vodafone, said MyRepublic intends to establish itself as a profitable enterprise over the coming quarters in the run-up to its initial public offering (IPO).

Koh, who served as Vodafone Head of Finance for Africa, the Middle East and the Asia Pacific, also leads MyRepublic’s expansion plans and oversees its fiscal strategies.

In an in-depth interview with DEALSTREETASIA, Koh discusses the company’s growth plans and strategy, potential destinations in the region such as Hong Kong, Australia and Singapore for a public float, the evolving role of CFOs and CSOs in the corporate sector, and women in corporate leadership.

Edited excerpts

What sort of financial performance is MyRepublic forecasting over the next few quarters in the run-up to the IPO?

My focus, in the next few quarters, is purely on the EBITDA percentage, because we’re well aware that we need to be profitable when we go to market, so that’s what I’m going to be focused on. We’re working on this quarter by quarter, and making sure that the EBTIDA improvement is there. Of course, right now, we are EBITDA negative, and we need to be moving to about 20 per cent plus the EBITDA percentage. That’s what I’ll be tracking closely.

You’re planning to establish a footprint in Sri Lanka, which gives you a beachhead and link to the Indian Ocean economies, all of whom are expected to enjoy an economic renaissance due to a rising India and China. Will MyRepublic be exploring markets such as Iran and Pakistan, both of which are relatively untapped?

What we’re clear about is we feel comfortable in operating directly in the telecommunications sector while adopting a direct model in Asia. When I say a direct model, it means that our own development team will go into the country. We will set up partnership arrangements with the right partner on the ground, and we can discuss Sri Lanka because we have been approached by potential partners regarding that market.

When you go to the other countries, it depends on the partner network and the market environment. We haven’t had any inquiries from those other countries you’ve mentioned, and I think as you go further away from Southeast Asia or the core Asian markets we have a presence in, there’s an element of higher risk.

Because then, I guess, as a business, you’re being stretched too thinly. We actually are looking at another model, which is a modern franchise model as we have a cloud platform and methodology for a low-cost approach to a fixed line business.

We’re actually looking at and asking ourselves “How would we franchise that?” That’s actually one development that can help expand our business model. Beyond our immediate geography, we’re looking at and have been approached by people in the Middle East as well as Africa. And we feel there’s probably appetite there to have a franchise model where you’ve got a very low-cost base and the people are interested in our methodology and platform.

You’ve highlighted the ASX, SGX and HKSE as potential listing destinations. In terms of the investor base, you have investor awareness in Australia and ASEAN but perhaps not so much in Hong Kong. What’s the appeal of Hong Kong, given MyRepublic has no Greater China footprint? PropertyGuru co-founder Steve Melhuish has argued that an HK listing only makes sense if you’re China-oriented

I think the challenges are that the different markets have their own distinct advantages and disadvantages. We get feedback from interested fund managers that they like a very liquid market, and they talk about having a decent retail capability in the market as well. We also can see that there are companies listed there that have a similar business approach to ours; I would quote Hong Kong Broadband as one.

But I think before we decide on the right exchange out of the three you’ve mentioned, we really need to do more work. So as you can imagine, I’ve got quite a lot of shareholders with an interest in exactly which market we’re going to do the listing. My approach would be as scientific as it can be.

One of the things we would do is begin to assign a scoring to elements that are important for us as a company. There’s a need for interest from investors beyond the initial IPO and I guess that’s one of the things we need to be taking into consideration is how easy would it be to raise capital as we expand across the region.

Would we need to go back to the stock exchanges and explore a secondary listing? What is the actual liquidity of the bourse that we can tap? What are the costs? What is the valuation we’re getting? We’re going to put all these different components and score them, and we will do a roadshow before we finalise the bourses. So, there’s no doubt we’re in discussion with the different markets, but we need to have something that’s more concrete than a gut feeling.

We need to have a discussion with the investors in each of those markets, as well as the feedback on the pricing of MyRepublic. Then, I think, through that process, as we put together our story, it will be clear which market will probably be more suitable for MyRepublic.

Is there any imposition on listing on the Tokyo Stock Exchange, which is the third largest stock exchange in the world? Since 2014, the Tokyo Stock Exchange has been pushing to rebuild its foreign listings pipeline and attract more technology enterprises.

I must admit that we’ve not come across that during our discussion with financial advisors and our shareholders, as well as the private equity (PE) funds we’ve been talking to. Most people have been pointing us towards Hong Kong, to the Singapore Exchange (SGX) because we’re here in Singapore, and to the Australian Securities Exchange (ASX) because we have a substantial business in Australia. Moreover, there seems to be a lot of appetite in Australia for telecommunication-type plays.

The pre-IPO round will see MyRepublic establish infrastructure assets in Indonesia. Could these assets be consolidated in a trust and listed, as in the listing of the Netlink NBN Trust listing that Singtel did earlier this year?

It’s something that we haven’t explored at this point, and I think there’s a considerable need to be given in view of the maturity of the assets, because I think at the back of your mind, you’re looking at the Hutchinson Port Holdings trust, which, to me, is quite a mature asset because it’s been there five years. And any growth with a trust will be lower growth.

When you’re rapidly building up infrastructure, it’s hard to package that for listing. You need time for the infrastructure assets to stabilise and have a meaningful set of financials when you put that together in the trust.

Firms like Garena and Razer, while they were still private entities, launched corporate venture arms. What’s your take on this and is there potential for this with MyRepublic?

We’re quite clear on our own business model. Just executing our business model potentially requires M&A and some form of venture investment. Therefore, we’ve not really looked at that. This is about companies exploring different spheres, so that will happen as we develop our platform, but not right now. It’s something you probably should ask me in a couple of years’ time.

The reason is, at this stage, we are very much focused on executing our deliverables, rather than taking some of the capital we’re raising and getting a separate team to focus on our future development.

Within a couple of years, I think that it is very likely our guys will start looking at this and asking, “How would you enhance the platform that we have?” Because it would be more mature and stable, and we can start thinking about corporate venturing then. I can’t tell you too much about the things we’re developing, but certainly, I think there’s an opportunity there to look at new technology that might be of interest to us and how it will enhance the partnerships we are engaged in and our core business activities.

I suspect, further down the line, there needs to be some form of collaboration and partnership, as you mentioned, akin to the Garena flavour.

Which sectors beyond the telecommunications space will MyRepublic explore?

We think, quite strongly, that the data ownership and what we do with data and predictive analytics in that area, is more interesting, and there’s value in that. We also know from talking to potential investors that we have a lot of intellectual property (IP) that’s actually not valued at this point in time.

We need to be able to develop these different flavours and I think as we move out of the phase we’re currently in, we’ll start exploring how to extract and offer more value through our services and IP.

Particularly with the likes of IP and the intangibles, we can see that development coming along the future centred around data analytics, What do we do with data? How do we monetize it? Can we change the model we’re working on today?

Within 12 months, I can see our teams looking at all these questions because that’s far more interesting and valuable than just building up our subscriber base. No doubt, you do need a strong base of subscribers and we’re are growing very fast with that.

But we also need to ask: What do you do with that? Where does that go? And, in the longer term, if you find that you have sufficient scale of subscribers on a platform, then you have started to discuss what can you do with all that information.

In the TMT sector, particularly technology, there has been a shift from CFOs making strategic financial decisions to driving business growth. Combined with the strategy element of the CFO position, and the role of women in driving profitability in corporations, what’s your take on this entire development?

I think it’s interesting regarding the roles of the CFO (chief financial officer) and CSO (chief strategy officer), because when I look at the activities of the CSO – and they’re discussing a newly appointed CSO – I thought the CFO would be covering that domain. It could be that there’s also a trend to hire analysts and bankers to be CFOs.

So traditionally, they would not be as much as a business partner as their skill sets are more aligned to fundraising and financial restructuring. My background is as a chartered accountant. And in the UK, there’s this expectation that a CFO needs to be able to handle a very wide breadth of disciplines.

They need to be risk managers, they need to be business partners, they need to understand the tax and the accounting, and how that flows through to be reported to the external, as well as the internal stakeholders. It’s quite a wide discipline, and they’re expected to know how to manage corporate banking and conduct financial restructuring, as well as possessing sufficient knowledge of the business to help the CEO drive strategy.

I think it really depends on what type of CFO you have in that job role. I think if you have a banker or an analyst, it would probably help the organisation to have a CSO to work alongside the CFO

Having said that, if you look at NiQ Lai, he started as an analyst. He’s now the CFO/COO for Hong Kong Broadband Network, and over the years he’s evolved. He’s certainly someone you would say is the perfect example who has developed from that background to being a full-fledged CFO and more.

There are plenty of examples out there. But if you have someone that’s been in banking for 20 years, and you expect them to come in and take the wider CFO role, I think that’s quite challenging. And I think that a CSO is definitely complimentary in that scenario. But at the end of the day, it really depends on the skillsets of people you have.

Any input on women facing a glass ceiling when it comes to corporate leadership? What’s your take on the situation in Asia?

Generally, if you have everyone looking the same on a board, they all tend to make the wrong decision together because they’re exactly the same. To me, it’s not just about women but to have people from diverse backgrounds and with different perspectives to inform strategic decision making. Otherwise, you’ll get corporate blindness where everybody believes they’ve made the perfect decision, but then they’re all thinking exactly alike.

I think that from my experience, I’ve really liked working in Asia. I’ve been working here most of my life – I’ve spent about 20 years here and another six years back in the UK during my early career – and during that period, I’d say there’s less of a glass ceiling in Asia.

This is particularly so in Singapore and tech enterprises, where you’ve got a lot of women leaders. The other telecoms operators in Singapore, Singtel and M1, are led by women CEOs. The head of IBM, Ginni Rometty, is a woman. I think that in the telecoms and technology space, as well as locally, you’ve got quite a few role models.

In the UK, what you’ll find is that there are not as many women CEOs. But in terms of board members, they’re aiming for 30 per cent representation and have already passed the 20 per cent threshold. Even though they may not be CEOs, women are well represented at the senior level. In Singapore? Board representation of women for Singapore’s listed corporates is lagging and below 10 per cent at the moment. So while there’s more work to do there, but if you look around in Singapore, there’s plenty of women CEOs represented, and I think part of that is down to culture.

It could be that there’s more support – in the form of domestic help – in Singapore and that is a very helpful element when you’ve got children. You don’t get that in the UK and it’s difficult to access, so that makes a difference.

Personally, the upbringing and values you grow up with are crucial. Growing up, my parents encouraged me to work for a living. That’s quite unusual because I was born in the 1960s, so the expectations and culture were very different. My parents felt that working for a living is important – whether you’re a boy or girl – and they were keen to see me succeed in my chosen profession, which isn’t always the case with more traditional Chinese families.

You see that today but it certainly wasn’t the attitude back then. I was expected to behave without reference to gender; if you execute anything, you do it with integrity and to the best of your ability.

When you start working, as a girl, it will be difficult and you need to be persistent, disciplined, and not take everything so personally. You just need to be focused on your work.

Talking about the social side, men tend to form a lot of relationships with people around them that they work with. Now, it’s helpful that they’re men, and they may be at a golf course socialising in a professional manner. But even as a woman, you need to build these kinds of professional relationships because, when we sit down, we talk about work, politics and family.

And these relationships are critical because it helps you connect with the people around you, as well as develop your career, in addition to receiving feedback and mentorship. All these things are important; time must be invested in order to get the return. That’s my advice to women that are looking to develop themselves professionally.

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