United States securities and exchange commission logo
January 19, 2023
Thomas Tam
Chief Executive Officer
Solowin Holdings, Ltd.
Room 1910-1912A, Tower 3
China Hong Kong City
33 Canton Road
Tsim Sha Tsui, Kowloon
Hong Kong
Re: Solowin Holdings,
Ltd.
Draft Registration
Statement on Form F-1
Submitted December
23, 2022
CIK No. 0001959224
Dear Thomas Tam:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form F-1 filed December 23, 2022
Prospectus Cover Page, page i
1. We note your disclosure
on the prospectus cover page that as of "the date of this
prospectus, [you] are
not subject to the PRC government s direct influence or discretion
over the manner in
which [you] conduct [y]our business activities outside of the
PRC." Please remove
these and similar statements throughout the registration statement.
Your disclosure should
clarify that the legal and operational risks associated with
operations in China
also apply to operations in Hong Kong.
Thomas Tam
FirstName LastNameThomas Tam
Solowin Holdings, Ltd.
Comapany
January 19,NameSolowin
2023 Holdings, Ltd.
January
Page 2 19, 2023 Page 2
FirstName LastName
2. Provide a description of how cash is transferred through your
organization and disclose
your intentions to distribute earnings or settle amounts. Provide
cross-reference to the
condensed consolidating schedule and the consolidated financial
statements.
Commonly Used Defined Terms, page ii
3. Clearly disclose how you will refer to the holding company,
subsidiaries, and other
entities when providing the disclosure throughout the document so that
it is clear to
investors which entity the disclosure is referencing and which
subsidiaries or entities are
conducting the business operations. Refrain from using terms such as
we or our when
describing activities or functions of the holding company,
subsidiaries, and other entities.
For example, on page ii of the Prospectus Cover Page, you define
we, us, the
Company, our or our company as the combined business of
Solowin Holdings, an
exempted company incorporated in Cayman Islands, and its consolidated
subsidiary.
Disclose clearly the entity (including the domicile) in which
investors are purchasing an
interest. Please also make conforming revisions throughout the
document.
Prospectus Summary
The Company, page 1
4. In one of the opening paragraphs, please include your revenues and net
loss or net income
for the most recent fiscal year and interim stub, as applicable. This
will provide a snapshot
of your company.
5. We note you discuss your users and registered clients on page 1.
Please revise to further
clarify the difference and clarify if some of the clients are both
users and registered
clients.
Our Corporate History and Structure, page 8
6. Please revise the organizational charts on pages 9 and 65 to include
the identity of the
person or entity that owns the equity in each depicted entity.
Currently such information
appears to be missing for Vulcan Worldwide Holdings Limited, Gemini
Asia Holdings
Limited and Fortune Dynasty Global Limited. Please include a chart to
show the
percentage of holding the public shareholders will have post-IPO.
A sustained outbreak of the COVID-19 pandemic could have a material adverse
impact on our
business, operating results and financial, page 19
7. We note your disclosure that "our results of operations have been
severely affected by the
COVID-19 outbreak." Please revise to clarify and quantify, to the
extent practicable,
how your business was negatively impacted by the pandemic.
Risk Factors, page 19
8. Please revise your disclosure to include a risk factor that discloses
that your officers and
directors are located in Hong Kong and that it would be difficult to
impose liability on
Thomas Tam
Solowin Holdings, Ltd.
January 19, 2023
Page 3
those individuals.
9. We note your disclosure regarding your asset management services and
Fund
products. Please provide risk factor disclosure, if applicable, in
regard to the holding of
these assets, that you might be considered an Investment Company under
the Investment
Company Act. As part of your response, please provide us an analysis
of any exemptions
you rely upon, if applicable, or advise. Please also clarify what you
mean when you refer
to the fund subscription fee you charge the client, on page 1.
We may be unable to retain existing clients or attract new clients, or we may
fail to offer services
to address the needs of our clients, page 21
10. We note your statement in this section that "[y]our total
revenue-generating clients
declined 56% from 4,818 as of March 31, 2021, to 2,104 as of March 31,
2022." Please
revise to clarify the large drop in the number of "revenue-generating
clients."
Our level of commission and fee rates may decline in the future, page 22
11. We note your disclosure that other firms may charge lower rates and
fees, but do not
provide any specific details on how your fees and commissions compare
to those of your
competitors. Please revise this section to provide a brief
quantitative comparison of your
fees and commissions compared to your competitors, or advise.
We rely on a number of external service providers for technology, processing
and supporting
functions, and if they fail to provide these, page 25
12. We note your disclosure that "[you] collaborate with a number of
external service
providers in providing services to [y]our clients for technology,
processing and supporting
functions" and that "if [y]our arrangements with any of these external
service providers
are terminated, [you] may not be able to find an alternative source."
Please identify which
third-party service providers you are referencing and a provide a
brief description of the
services each provides.
Failure of third-party systems upon which we rely could adversely affect our
business operation,
page 26
13. We note your disclosure that "[y]our business rely on technologies
developed or licensed
by third parties" and that "any interruption in the third parties
services, or deterioration in
the third parties performance or quality could adversely affect our
business operation."
We further note your disclosure that "[you] may not be able to obtain or
continue to obtain
FirstName LastNameThomas Tam
licenses and technologies from these third parties on reasonable terms,
or at all." Please
Comapany NameSolowin
identify Holdings,
the licenses, Ltd. and third-party providers you are
referencing and a
technologies
Januaryprovide a brief
19, 2023 Pagedescription.
3
FirstName LastName
Thomas Tam
FirstName LastNameThomas Tam
Solowin Holdings, Ltd.
Comapany
January 19,NameSolowin
2023 Holdings, Ltd.
January
Page 4 19, 2023 Page 4
FirstName LastName
We derived a substantial portion of revenue from a small number of key client,
page 27
14. We note your disclosure that "in fiscal years ended March 31, 2021 and
2022, [you]
derived a substantial portion of [y]our revenue from a small number of
key clients" but
that "as the trading platform expands, [you] anticipate, but without
assurance, that this
concentration may possibly be decreasing in the future." Please revise
this disclosure to:
Quantify the percentage of revenue derived from these key clients
for the fiscal years
ended March 31, 2021 and 2022; and
Clarify why you believe that the proportion of your total revenue
derived from a
small number of customers may possibly be decreasing in the
future.
Please also include this risk factor in the Prospectus Summary.
Use of Proceeds, page 50
15. We note that you plan to use a portion of the proceeds from this
offering for "conducting
strategic investments and acquisitions in complementary businesses"
but that you have not
identified any specific investments or opportunities at this time. We
further note on page
56 you state that "[you] have been discussing several investment
advisory businesses and
jobs related to Financial Analysis." Please clarify whether you have
identified any such
financial investment advisory businesses and identify them if so.
Please disclose the status
of any negotiations with respect to possible acquisition of such
businesses, and a
brief description of these businesses. Refer to Instruction 6 to Item
504 of Regulation S-K.
Overview, page 54
16. We note that you refer to "Hong Kong IPO margin financing services."
Please briefly
describe these services.
Our Reportable Segments, page 57
17. We note in your Segment footnote beginning on page F-15 that you
disclose three
reportable segments (i.e. securities related services, investment
advisory services and asset
management services) and also identify a corporate segment in
your disclosure, which
appears to be different from the reportable segments identified on
page 57. Please revise
your filing and related reportable segment information to provide
consistent disclosures.
18. To the extent that you believe disclosure of your reportable segments
is necessary for an
understanding of your business, please revise the Management's
Discussion and Analysis
("MD&A") section of your filing to discuss the results of operations
for each of your
reportable segments, and also include a discussion of material
year-over-year changes in
the components of each segment s profitability. Please refer to Item
303(b) of Regulation
S-K and SEC Release No. 33-10890.
Thomas Tam
FirstName LastNameThomas Tam
Solowin Holdings, Ltd.
Comapany
January 19,NameSolowin
2023 Holdings, Ltd.
January
Page 5 19, 2023 Page 5
FirstName LastName
Results of Operations, page 58
19. We note disclosure that revenue from securities brokerage commissions
and handling
income increased by $1.08 million for the fiscal year ended March 31,
2022 primarily due
to an increase in the handling income received for IPO subscription in
Hong Kong. We
also note disclosure on page 21 that your total revenue-generating
clients declined 56%
during this same time period. Please revise your MD&A to include an
enhanced
discussion of the reason(s) for the changes in revenues during each
period. Please also
include a discussion of key variables (e.g. revenue-generating
clients, number of
transactions, etc.) and financial measurements that management is
using in managing their
business. Please refer to Item 303(a)(3) of Regulation S-K.
20. We note disclosure on page 73 that you earn fees of between 1.5% and
2.5% of your
assets under management ( AUM ). Understanding that this line of
business was
established in 2022, please revise your MD&A section to provide a
rollforward of your
AUM, disaggregated by product, to include beginning and ending
balances, inflows and
outflows, market appreciation and depreciation and new funds
established. Please also
discuss any significant trends or concentrations in your AUM.
General and Administrative Expenses, page 59
21. We note disclosure that your general and administrative expenses
increased during the
fiscal year ended March 31, 2022 primarily due to referral fees of
$681 thousand for
introducing new customers and also note disclosures on pages 101 and
F-22 related to
referral fees paid to related parties. Please revise your filing,
where appropriate, to
disclose the total referral fees paid for each period along with a
discussion of how these
referral fees are determined and accounted for, and a discussion of
which product
offerings these referral fees relate to.
Interest expenses, page 59
22. We note that you refer to "interest expenses consist[ing] primarily of
interest paid to
[y]our brokers for IPO subscription financing." Please briefly
describe this expense.
Total other income, page 59
23. We note that you refer to $57,000 in "total other income for the
fiscal year ended March
31, 2021" that "consisted of government subsidies." Please revise to:
Describe the nature of these subsidies;
Who provided them (e.g., Hong Kong, China, etc.); and
Whether you received any similar subsidies for the fiscal year
ended March 31, 2022.
Securities brokerage commissions and handling income, page 62
24. We note that you refer to "dividend collection handling income."
Please briefly describe
the services provided for this income.
Thomas Tam
FirstName LastNameThomas Tam
Solowin Holdings, Ltd.
Comapany
January 19,NameSolowin
2023 Holdings, Ltd.
January
Page 6 19, 2023 Page 6
FirstName LastName
Our Services, page 69
25. We note disclosure on page 22 that you began your IPO subscription
services in June
2020 along with disclosure on page 58 that your revenues increased
during the fiscal year
ended March 31, 2022 primarily due to handling income received for IPO
subscription in
Hong Kong. Please revise your filing to include a detailed discussion
of your IPO
subscription offerings and your accounting for these services. In your
revised disclosures,
please specifically discuss the subscription financing arrangement(s)
you provide as
disclosed on page 69 in addition to discussing how you recognize both
interest income
and interest expense from these financing arrangements as disclosed on
pages 58-59.
Customers, page 76
26. Please disclose the identity of the largest three customers who
accounted for 51%, 17%
and 10% of your total revenues for the fiscal years ended March 31,
2022, or
advise. Please include risk factor disclosure related to any
dependence on a limited
number of customers.
Industry, page 77
27. Please revise your filing to clearly define the term turnover as
included in your tabular
presentations of total turnover of stock connect in Hong Kong and
total turnover of
securities market in Hong Kong on page 78, in addition to all
references of turnover noted
on pages 81-82.
Minimum capital requirements, page 91
28. We note your disclosure that Solomon JFZ is required to have a minimum
paid-up share
capital of HK$10,000,000 and to maintain minimum liquid capital of
HK$3,000,000.
Please disclose if you currently meet these requirements.
Receivables from Customers and Broker-Dealers and Clearing Organizations, page
F-10
29. Please revise your filing to include your policy for determining past
due or delinquency
status as required by ASC 310-10-50-6(e).
Note 14. Concentrations and Risks, page F-23
30. We note your disclosure on page F-24 of your customers who represent a
significant
percentage of your total revenues, total receivables and total
payables as of each period
presented. Please confirm that your current disclosure of customers
(i.e. Customer A,
Customer B, etc.) represent separate and distinct customers and that
there are no
customers currently listed, for instance, that also comprise a
significant percentage of
either your revenues or your receivables or payables for any period
presented and revise
your filing to clarify accordingly.
Thomas Tam
FirstName LastNameThomas Tam
Solowin Holdings, Ltd.
Comapany
January 19,NameSolowin
2023 Holdings, Ltd.
January
Page 7 19, 2023 Page 7
FirstName LastName
General
31. Please revise your disclosure throughout the document, including the
prospectus summary
and risk factors, to reflect that the United States Congress has
passed the Accelerating Holding Foreign Companies Accountable Act,
which decreases
the number of "non-inspection years" from three years to two years,
and thus, reduces the
time before your securities may be prohibited from trading or
delisted.
32. We note your disclosure in the summary section on page 10, the Entry
Barriers section on
page 81, the Responsible Officers section on page 89, etc. that you
only have one
"responsible officer" even though the Securities and Future Commission
of Hong Kong
(the "HKSFC") requires two responsible officers. You further stated
that "HKSFC has not
taken any issue as to this non-compliance as at the date of this
prospectus" and that you
are "of the view that this non-compliance is immaterial in carrying
out [your] ordinary
businesses." Please provide us your analysis as to why you believe
this non-compliance is
immaterial.
You may contact Shannon Davis at (202) 551-6687 or John Spitz at (202)
551-3484 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Robert Arzonetti at (202) 551-8819 or Susan Block at (202) 551-3210
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Finance
cc: Kevin Sun