Metech International has become the first listed firm here to raise money via a crowdfunded bond issue and is already halfway to raising its target of $2 million.
More listed companies could follow suit as early as next month, said licensed crowdfunding platform FundedHere yesterday.
Metech, an electronic waste harvesting firm with a market value of $12.7 million, is issuing $2 million unrated bonds with a two-year tenure and 8 per cent coupon rate. Half the principal will be repaid after the first year.
The Singapore Exchange (SGX) has also stepped up to play the role of custodian in the bond issue, announcing yesterday that its Central Depository will take on the role as a depository for so-called "crowdfunded listco bonds" from now.
Mr Chew Sutat, SGX head of equities and fixed income, said yesterday: "We saw this as facilitating an alternative funding channel that our Catalist companies can potentially gain access to."
We saw this as facilitating an alternative funding channel that our Catalist companies can potentially gain access to. With more and more private fundraising platforms seeking to complement the public fundraising market, we hope to be a facilitator.
MR CHEW SUTAT, SGX head of equities and fixed income, on the company serving as a depository for "crowdfunded listco bonds".
He added: "With more and more private fund-raising platforms seeking to complement the public fundraising market, we hope to be a facilitator."
He was speaking to a gathering of about 40 heads of listed companies at the SGX auditorium yesterday, some of whom expressed interest in crowdfunding as a source for bridging loans at a time when bank loans are harder to secure.
Metech chairman Simon Eng said his company had struggled to raise money from banks despite being debt-free, after the commodities rout beat down metal prices and Metech's profitability. The firm swung back into the black only in the quarter ended Sept 30.
Mr Eng said: "Due to low share prices currently, it may not be practical or possible for some listed companies to issue new shares to raise capital. FundedHere provided us with a viable alternative, one that is simple and hassle-free."
Crowdfunded bond issues are open to accredited investors only, and crowdfunded bond issues like this one cater to a gap in the market, Mr Chew said.
"Many investors have (commented) that even in the accredited investor space, they would like to have smaller tickets, and in this instance the platform allows them to come in from $50,000. So the ability for the investor to diversify is facilitated by this type of platform."
Typically, accredited investors must set aside at least $250,000 to participate in a traditional bond issue.
Metech's bond issue has raised more than $1 million since opening for subscription last week. FundedHere chief executive Michael Tee said he was confident of making up the rest before the 30-day deadline is up.