Malaysia’s Flexiroam guns for Australia IPO at expected $31M valuation

Malaysia-based roaming service provider Flexiroam today announced its intention to raise up to A$12 million (US$9.4 million) through an initial public offering (IPO) on the Australian Securities Exchange (ASX). Funds raised from it will go towards developing and marketing its existing products; research, development, and marketing of new products; and expanding internationally.

Right now, Flexiroam’s services are available to travellers from eight countries – Malaysia, Singapore, Indonesia, Australia, Canada, Hong Kong, the US, and the UK. With fresh funds in hand, it will expand its business in Singapore, Thailand, Indonesia, as well as open up operations in China, Hong Kong, and India.

Flexiroam will be issuing 60 million shares to the public at A$0.20 (US$0.16) each, with a minimum subscription of A$8 million (US$6.2 million). If all goes well and its IPO bid is fully subscribed, Flexiroam will have an estimated market capitalization of A$40.3 million (US$31.5 million).

“Since its inception, Flexiroam has saved travellers millions of dollars in roaming charges and has grown its subscriber base to over 300,000,” says Flexiroam founder Jef Ong. “Through this IPO, we hope to provide further innovations in telecommunication technologies to make the roaming experience more convenient and user-friendly. Our goal is to expand the Flexiroam brand in Southeast Asia and introduce it to the rest of the Asia-Pacific region.”

The startup’s current core products include the Flexiroam Roaming Pass and the Flexiroam SIM cards, which allow travellers to use their local numbers at their destination of choice for a daily fixed fee. A mobile app, roaming device, and a product called SIM Paste – “a thin microchip-embedded film that converts the user’s phone into a dual SIM phone when used overseas” – will be added to the list pending a successful IPO.

In particular, A$2 million (US$1.5 million) from the IPO proceeds will be plunged into the mobile app, which will allow users to make calls from their smartphones directly using wifi or any other internet connections – without requiring the receiver of the call to have the app.

According to a statement, Flexiroam recorded a revenue of approximately A$3 million (US$2.3 million) – and a net profit of approximately A$200,000 (US$155,000) – from March till December last year.

The team has received MYR1.5 million (US$470,000) in government grants so far, and while they have received some VC interest locally, Ong felt that the valuations were too low, which would explain why he decided to go for an IPO instead.

“[It gives us a] larger capital market as compared to limited VCs – at least for our sector – for future raising if the need arises,” he adds.

Another reason might be because one of Flexiroam’s close competitors, Ziptel, had listed on the ASX in May last year and performed very well. The latter had listed at A$0.20, and its price is now at A$0.60, with predictions that it will go as high as A$0.90. Flexiroam’s revenue is almost ten times more than the Australian startup, which puts it in good stead moving forward.