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June 9, 2000 VOL. 29 NO. 22 | SEARCH ASIAWEEK

Asiaweek Pictures
Believer:'s Grove is confident that his Internet portal has a bright future, and that investors share his belief

Please Don't Wake Me
Shaky IPOs chill Singapore's Internet dreams

Bam! Was that a window slamming shut? The Internet stock party had just been getting funky in Singapore. Three of the city's best-known dotcom companies were launching initial public offers of their shares within days of each other. On the playlist:, Southeast Asia's biggest Web portal;, a business-to-business office supplies venture; and SPH AsiaOne, the online unit of Singapore Press Holdings. Now, only AsiaOne is proceeding after the others postponed their IPOs. Some analysts fear the delays might become permanent. "Although there is still appetite for IPOs from companies with very strong business models or technology, the window of opportunity for most of the rest of the dotcoms in Asia has probably closed forever," says Jay Chang, regional Internet analyst for Credit Suisse First Boston in Hong Kong.

For the past half year, dotcom fever swept Asia. Inspired by the mushrooming millionaires of Sili-con Valley and the soaring Nasdaq stock market in the U.S., experts and officials chorused that Asia's future was on the Internet. Venture capitalists rushed to fund anyone with a dotcom and a dream. Com-panies with hardly any sales and no profits listed shares at incredible valuations, especially in Tokyo, Seoul and Hong Kong. Then, Nas-daq stumbled and Asian tech stocks fell on their faces. Shares in the region's top two Internet investors, Japan's Softbank and Hikari Tsu-shin, are down 75% and 97% from their peaks, respectively. Suddenly, it's a colder world for aspiring dotcoms looking for money.

The climate change caught Catcha at an awkward time. The portal had planned to raise nearly S$55 million ($32 million) by issuing shares at 80 Singapore cents each. Just before its IPO last week, worried by weak sentiment in the wake of Nasdaq declines, its underwriters warned that the offer might be undersubscribed even if they were sold at 60 cents. Catcha decided to hold fire. The trouble is, analysts estimate that the portal has $2 million in its kitty, but a "burnrate" -- the speed at which it spends money -- of about $1.7 million a month. "They are as good as dead," says one analyst. "I doubt they would ever be able to do an IPO or that anyone would want to fund them now."

"Nonsense," scoffs Patrick Grove, the 25-year-old Singaporean-Australian chief executuve of Catcha, who along with two young Malaysians (both in their mid-20s) formed the venture 10 months ago. Grove says Catcha has cut its burnrate to less than $300,000 a month, and so can survive seven months without any cash infusion. Moreover, he says direct investors are still willing to put money into Catcha. "If we can't do an IPO within the next six months, we'll just do another round of financing." The young entrepreneur insists: "I have no doubt we will do the IPO and we will definitely get a better valuation than we would have gotten last week. Why settle for less when [by waiting] I get more?"

Raphael Tham, CEO of WizOffice, concedes that the market's view of tech plays has hardened. "We know investors' perception towards dotcoms has changed and they are more discriminating," he says. The B2B service has only $1.7 million in cash left, enough for four months at its current burnrate. But, like Grove, Tham is sure WizOffice can launch its IPO soon or do a fifth round of financing. One concern is whether new investors think Tham's company is already too pricey. When Hikari Tsushin bought 7.6% of WizOffice in its last financing round, the deal valued the venture at a hefty $64 million. Again, Tham isn't worried. "You would be surprised, they are still willing to put a valuation far in excess of that," he says.

Still, the froth has subsided. The AsiaOne IPO is going ahead to mixed reviews. It will issue shares at 60 Singapore cents each to raise S$79 million ($45.7 million), valuing the venture at $405 million. Many analysts like AsiaOne's wealthy parent, Singapore's government-linked newspaper publisher, but otherwise don't have much good to say. Michael Sia of SG Securities Asia says that at its offer price, "AsiaOne is eight times as expensive as Yahoo! per subscriber and four times as expensive as and Chinadotcom." Some investment houses have advised clients to avoid the issue -- and expect the shares to dive when they start trading on June 5.

Many aspirants seem to be adapting to the new climate. "Pru-dence requires us not to rush our IPO," says Lai Kwok Kin, head of, a financial chat site which had been seeking a listing. Lai is confident that it will be able to proceed before the year-end, but he draws comfort from a cash pile that can last for two years. Meanwhile, has drastically cut its marketing budget and slowed plans to expand staff.

So with the postponements of Catcha and WizOffice, and Asia-One's expected slump, is the party over even before it started? "These IPOs, being the first major Internet IPOs, are psychologically important for Sin-gapore," says Lim Kia Hong, CEO of SiS Technologies and a dotcom investor. "It is going to be harder for some of the dreamers to get the ridiculous valuations they were aiming for." But there is a bright side. Says Lim: "The get-rich guys will die, and those who really have technology and are really serious about building a business will reap rewards, because the Internet is here to stay." Here's to serious dreamers.

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