Home-grown Wellous chooses Nasdaq as its launch pad

(From left) Wellous Group Ltd co-founder and chairman Henry Chin, co-founder and chief executive officer Andy Tan, and group president Tan Lee Koon, as well as Kairous Acquisition Corp Ltd CEO and major shareholder Joseph Lee (Photo by Zahid Izzani Mohd Said/The Edge)

KUALA LUMPUR (May 16): Founded in 2016, Wellous Group Ltd is a Malaysian home-grown health food and nutrition company that develops, manufactures and sells health and wellness products.

Notwithstanding the negative perception towards special purpose acquisition companies (SPACs) in the US lately — with some filing for bankruptcies — Wellous has decided to pursue a listing there by merging with Nasdaq-listed blank check company Kairous Acquisition Corp Ltd.

Wellous co-founder and chairman Henry Chin said the merger with Kairous would provide the company an opportunity to not only access the US capital markets, but also the international markets.

The listing will also enhance Wellous’ corporate profile and brand visibility, which will help its business growth going forward.

“It is important for us to choose the right approach and partner to become a public company. Already, we are seeing a few Malaysian companies going for listings in the US. We believe this is a right move for Wellous,” he told The Edge in an interview.

Chin revealed that Wellous had considered a listing on Bursa Malaysia, but the company eventually settled on a Nasdaq listing, as it believes the Nasdaq could give it a global presence and establish itself as an international brand.

Besides its home market, Wellous has a growing presence in Asia-Pacific, primarily in Singapore and Hong Kong.

“Today, we are still a young company. We believe a Nasdaq listing could give us the mileage to bring our business forward. After much consideration, we decided to seek a Nasdaq listing. This will be a monumental step in the development of our company, and it is something we look forward to,” he remarked.

Last December, it was announced that Wellous and Kairous signed a definitive merger agreement that will result in the combined entity — to be named Wellous Group Holdings Ltd (WGHL) — becoming a public listed company.

The merger consideration is US$270 million (about RM1.2 billion), which shall be payable by newly issued securities of WGHL valued at US$10.10 per share.

Cash proceeds raised will give Kairous about US$21 million in trust — assuming no redemptions by Kairous’ existing public shareholders — which is anticipated to support Wellous’ growth capital needs and working capital purposes.

The merger and listing exercise is expected to be completed by the third quarter of this year.

A hidden gem

Kairous chief executive officer and major shareholder Joseph Lee described Wellous as a “hidden gem”.

“We considered over 1,000 high-growth companies within Southeast Asia before we identified about 10 potential candidates. Fortunately for us, we searched hard enough, and we found what we wanted,” he said.

Lee said Kairous’ objective was to acquire a company that possesses attractive long-term growth potential and would benefit from the network, as well as his leadership team's financial and operational experience.

“In fact, a SPAC listing on the Nasdaq does not require the company to be profitable. We knew it’s not hard to find a high-growth company. The difficulty was identifying a profitable one. While we are not in a position to disclose the financial numbers of Wellous now, all we can say is the company has the profile of the target that we were hoping to find, which led us to a discussion about the possibility of a merger,” he explained.

According to Bloomberg, at least eight businesses that went public through mergers with SPACs have sought protection from creditors since June 2022.

Lee is unfazed by the negative perception towards SPACs in the US, saying Wellous has an attractive business model and tools to thrive in the Southeast Asia region.

“We believe that whether it's a good or bad market, as long as your company has strong fundamentals, you will still be able to attract investors’ attention. If we continue to do well, we will gain traction, and investors will appreciate us,” he said.

Riding on social commerce trend

Wellous group president Tan Lee Koon said the company specialises in selling health food products online. From day one, the company’s idea is to focus mainly on building and leveraging its social commerce model to promote and market its products.

“Today, we are one of the largest online health food producers in the region. We sell our products via social media, on platforms such as Facebook, Instagram and TikTok. At the same time, we also engage key opinion leaders to sell our products. Social commerce gives us an opportunity to reach out to our customers, understand their needs better, and interact with them directly,” he said.

Wellous also engages comedian Harith Iskander, retired badminton star Goh Liu Ying and radio DJ Jack Lim as its brand ambassadors to promote its products.

“We are happy with our growth. We believe we are just scratching the surface of the addressable market. We are constantly developing new products to capture the market,” he said.

Wellous co-founder and CEO Andy Tan said traditionally, consumers purchase health food and nutrition products over the counter. But today, with social commerce being the trend, he believes Wellous’ business will grow as long as the company catches the trend.

“Social commerce has been our main strategy, because we want our customers to really understand our products. Our dealers and techpreneurs would suggest our product offerings based on their needs. We provide an in-depth explanation to them (our customers), instead of them going to an e-commerce site to buy our products without knowing the details,” he said.

Wellous has 32 products, mainly developed by its own team, and its natural ingredients are sourced globally.

“Our product offerings cover different functions from beauty and health, anti-ageing, women and men’s health to weight management. There is a lot of temptation for us to diversify into other areas, but for now we prefer to expand our product portfolio within these areas. Our immediate priority is to provide depth to our product portfolio, and focus on doing what we are good at, instead of going everywhere at once,” said Andy.

Upon listing, Chin and Andy, who will continue to run the company by spearheading its management team, are expected to retain a majority stake in WGHL.