Singapore Based Pawnbroking, Jewellery & Watch Trading Company ‘MoneyMax’ Goes Public

Lately, a few persons have been searching for the MoneyMax Initial Public Offering (IPO). While we’re happy for these visitors, (and hope that one day we too can be listed 🙂 ), we realize that more than likely they would have been looking for information on the 5 year old pawn broking Singapore based company – MoneyMax Financial Services. They also do retail and trading of pre-owned jewellery and watches.

MoneyMax101 and the Singapore based MoneyMax Financial services are not related. MoneyMax Financial services is in Singapore and we are focused on doing business in the Caribbean, however, the words initial public offering draws us together; that’s something that we write a lot about.

Jamaica and Singapore on the Map – Worlds apart

What Do They Do?

Logo of Singapore Based Monemax Financial Services

To understand what this business does, we did a little research. We think it would be good for local Caribbean readers to check out this company and industry as it would probably allow us to see the opportunities or challenges in our markets; likewise for the international researchers, you may probably see international expansion opportunities and challenges in our jurisdictions as well.

As seen below from their prospectus,

• they provide pawnbroking services and do retail and trading of pre-owned jewellery and watches.
• They have 27 outlets (and if they’re one of the largest companies, then I assume that there are competing firms of a similar size, which also means that Singapore has a big pawn, jewellery and watch trading industry).

What does Moneymax Financial Serices Do?

Pawn, Pawnshop and Pawn Broker – What are these?

I assumed I knew what these were, until I checked the definitions and got some clarity on them. Wikipedia describes as follows;

A pawnbroker is an individual or business (pawnshop or pawn shop) that offers secured loans to people, with items of personal property used as collateral. The word pawn is derived from the Latin pignus, for pledge, and the items having been pawned to the broker are themselves called pledges or pawns, or simply the collateral.

If an item is pawned for a loan, within a certain contractual period of time the pawner may redeem it for the amount of the loan plus some agreed-upon amount for interest. The amount of time, and rate of interest, is governed by law or by the pawnbroker’s policies. If the loan is not paid (or extended, if applicable) within the time period, the pawned item will be offered for sale by the pawnbroker. Unlike other lenders, the pawnbroker does not report the defaulted loan on the customer’s credit report, since the pawnbroker has physical possession of the item and may recoup the loan value through outright sale of the item. The pawnbroker also sells items that have been sold outright to them by customers.

What Do They Plan to Do

Some of their future plans are to;

• Expand their network of outlets
• Refurbish and improve their existing outlets
• Expand their range of pre-owned jewellery and watches
• Increase branding and marketing activities
• Expand through acquisitions, joint ventures and/or strategic alliances

Other Things To Note

• They are offering 53,800,000 new shares at S$0.30 (US$0.237) for each new share (which includes 500,000 shares reserved for their Independent Directors, Key Executives, management, employees, business associates and related parties).
• The shares will commence trading 9.00 a.m. on 2 August 2013
• I notice how comprehensive this prospectus document is, a whole 289 pages. The section just outlining risks is 10 pages.
• Here is a detailed review of the IPO done by another blogger.

Opportunities in the Caribbean?

The business of pawn broking in the Caribbean (on the face of it), looks like a viable opportunity. In fact, most persons would immediately suggest that the cellphones could be a big business here. I could see a few challenges there; however, for a 5 year old company and a population of about 5 million people in Singapore, they have managed to gross pre-tax profits in Financial Year 2012 of US$4.5 million. Thats J$450 million dollars or TT$29 million dollars from loans to customers from items that they brought as collateral!!

‘Common items pawned (or, in some instances, sold outright) by customers include jewelry, electronics, collectibles, musical instruments, and tools.’

MoneyMax Financial Services Operating Results

And this seems like a worthwhile business to consider. I am not sure if there are any such businesses in Jamaica, Trinidad, Barbados or the rest of the Caribbean, however as seen in their prospectus there has been growth in the pawnbroking industry and growing acceptance of pawnbroking. Their report states that

• Pledges received at Singapore pawnshops increased by approximately 46.9%, from approximately 2.7 million pledges in 2007 to approximately 4.0 million pledges in 2012
• Loans disbursed by Singapore pawnshops increased by 343.8%, from approximately S$1.6 billion in 2007 to approximately S$7.1 billion in 2012
• We believe there is growing acceptance of pawnbroking amongst Singapore consumers

As for reducing theft, ensuring loans are given to legitimate owners of property, and dealing with the police, there are a whole set of regulations and practices that are taken in businesses like these to protect the different parties. So that should reduce the concerns of some and further help to reinforces businesses like this.

The full prospectus is here.