Vertex Technology Acquisition Corporation Ltd (VTAC), a special purpose acquisition company (SPAC) that is backed by Singaporean state investor Temasek, will buy streaming platform 17LIVE Holding Limited for SGD 925.1 million ($675.35m).
VTAC said in a statement on Monday that the duo have signed a conditional sale and purchase agreement (SPA) in connection with a proposed business combination that will result in the target company 17LIVE Inc. becoming a publicly listed company on the SGX-ST.
According to the statement, the pro forma equity value of the proposed business combination is up to SGD 1,161 million ($847.56m).
Public listing on SGX-ST will reinforce 17LIVE’s business momentum as the premier pure-play live streaming platform and fuel new business growth such as V-Liver and regional expansion into high growth markets such as Southeast Asia and United States.
To align interests of all stakeholders, the proposed business combination includes various incentive shares to be issued to eligible shareholders of VTAC and 17LIVE, the management of 17LIVE and new PIPE investors.
The acquisition will be satisfied with the allotment and issuance of up to 160,605,109 new shares in the company at the issue price of SGD 5.00 ($3.65) to 17LIVE, on completion of the proposed business combination, and subject to the satisfaction of certain financial targets, the allotment and issuance of up to 24.41 million new shares in the company at the issue price to 17LIVE.
VTAC will be renamed 17LIVE Group Limited at completion of the proposed business combination.
“We are thrilled to work with the 17LIVE team as they continue to break new grounds in the evolving consumer-internet space as an innovative and cutting-edge market leader,” said Jiang Hong Hui, Executive Director and Chief Executive Officer of VTAC.
In keeping with VTAC investment mandate, he said 17LIVE is a leading player in an exciting digital space.
He also said 17LIVE has displayed synergies through its core capabilities and presents strong growth potential in both its core live streaming businesses and the new V-Liver business, and it has been profitable since FY2020.
“We see 17LIVE as a company at its inflection point, backed by a strong management bench whose professional expertise and vision will help it navigate the dynamic ecosystem,
“The sponsor has invested SGD 30 million ($21.91 million) in VTAC at initial public offering (IPO) and is committed to roll its investment over to the 17LIVE combined entity,” he added.
It is noted that the target company as well as its subsidiaries is a technology-driven live social entertainment platform.
The target group operates 17LIVE, which is the top pure-play live streaming platform (by revenue) in Japan and Taiwan. In 2022, 17LIVE commanded a market share by revenue of 20.8 percent in Japan and 26.9 percent in Taiwan, according to Frost & Sullivan.
17LIVE is accessible globally, and the target group’s key markets of operations include Japan and Taiwan with a presence in Hong Kong, Singapore, the United States, the Philippines, India, and Malaysia, as of 30 June 2023.
17LIVE is the target group’s flagship product. The target group has fostered a diverse live streaming ecosystem with a loyal and engaged user community and a deep talent pool of live streamers.
17LIVE connects users with live streamers who generate content of interest through AI-powered personalized search and recommendation.
Livestreaming within 17LIVE enables users to interact and socialize in real time with live streamers and show their support and appreciation to the live streamers by sending virtual gifts, which results in successful monetization for the live streamer.
The content created by the live streamers on 17LIVE is carefully curated by local, on-the-ground and culturally sensitive operation teams.
The target group also leverages its strategic partnerships and collaborations with local celebrities, politicians and athletes to produce insightful content which is exclusive to 17LIVE.
Furthermore, the target group produces original in-house shows featuring live streamers.
For the first half of FY2023, the target group had an average monthly active users (MAU1) of approximately 550,000 with an average daily view duration per daily active user of approximately 93 minutes and a Spend Rate of 16.1 percent on 17LIVE on a monthly average basis.
As of 30 June 2023, the target group had entered into contracts with approximately 87,000 live streamers.
The target group has a scalable business model with improving profitability.
In 2022, the target group generated revenue of $363.7 million.
The target group’s management has been focused on enhancing its profitability resulting in the target group achieving positive earnings before interest, taxes, depreciation, and amortization (EBITDA) since 2020 and generating adjusted EBITDA of $15.8 million in 2022.
To drive continued engagement within this ecosystem, the target group has introduced innovative business initiatives such as V-Liver, in-app games and live commerce, which are highly synergistic with its core live streaming business and act as drivers for future sustainable growth of the target group’s business.
In particular, the target group has implemented various initiatives for V-Liver development since the start of 2023, and as a result witnessed strong growth momentum in its V-Liver business in terms of V-Liver talent pool, viewer base and engagement.
“As a technology-driven live social entertainment platform, 17LIVE has made extensive investment to enhance its research and development (R&D) capabilities and scalable technology stacks in order to effectively innovate its product offerings and ensure content and data security,” said Joseph Phua, Chairman and Co-Founder of 17LIVE.
He said the firm has over time refined its core capabilities whilst harnessing the vision of a live streaming ecosystem to better connect people anytime, anywhere.
“VTAC, with their strong expertise in technology has today, validated this vision as we take another step towards solidifying 17LIVE’s position as an innovative leader in the space,
“Listing on SGX-ST will allow 17LIVE to grow its businesses in Southeast Asia and globally. We believe this is a unique, exciting investment opportunity for investors,” he added.
The proposed business combination is subject to the approval of the SGX-ST and VTAC’s shareholders at the extraordinary general meeting (EGM), which is expected to be obtained in end of 2023.