Razer eyes US listing, but SG peers’ struggles weave cautionary tale

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On November 14, 2017, Razer Inc (1337, HKG) basked in the glory of a stellar market debut. The maker of gaming hardware had listed at HK$3.88 per share and closed 18% higher on its first day of trading in what would go on to be Hong Kong’s second-most successful IPO that year.

But that was as good as it ever got for Razer’s fortunes in the Asian financial hub. Fast forward to nearly five years later, and common shareholders approved a proposal for Min-Liang Tan, Razer’s founder and CEO, to take the company private through a consortium that includes several top Razer executives.

The company will go private at a valuation of US$3.17 billion – lower than what it was worth when it listed.

After all, the consortium – of which private equity firm CVC Capital Partners is a part – believes Razer has been undervalued in Hong Kong, where it has suffered from low trading volumes. Razer’s turnaround plan, in a nutshell, is to eventually list in New York, hoping to exploit the higher valuations that tech stocks enjoy there.

A quick scan of how its Singaporean tech peers have performed on US-based exchanges, however, might compel Razer to rethink its strategy.

The obvious cautionary tale is that of Grab (GRAB, NDAQ): The super app lost a fifth of its value on the day of its listing in December and never really recovered since. Despite reaching a high of US$13.29 apiece within hours of its market debut, Grab’s shares currently trade below US$3.00.

Image credit: Timmy Loen

Another Singapore-based company that has succumbed under the weight of negative investor sentiment, despite being an even bigger tech giant, is Sea Group (SE, NYSE). The firm has shed over 70% of its value in the last six months.

However, it is worth noting that Sea’s shares, which debuted the same year as Razer’s, trade over five times higher than their IPO price of US$15.00 per share.

Meanwhile, M&A chatter has pushed Razer’s stock up in the last six months, but its shares still trade more than 30% below its listing price. For now, however, Razer and its executives are probably happy just to have put an end to the firm’s harrowing experience on the Hong Kong stock exchange.

Speaking of IPOs, GoTo Group’s (GOTO, IDX) shares have already slipped below their IPO price of 338 rupiah within three weeks of listing. However, that hardly puts a dent in the mammoth returns GoTo’s early investors have pocketed.

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