Cash Technology

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Nigel Goodwin prepared this case under the supervision of Professor Larry Wynant solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail Copyright © 2005, Richard Ivey School of Business Foundation

Version: (A) 2010-11-01


Cash Technology Limited (CashTech), a Chinese producer of self-service banking machines and related technology, was preparing for its initial public offering (IPO) on the Singapore Exchange (SGX). The proceeds from the planned December 14, 2004 offering would finance the five-year-old, private company’s expansion in the burgeoning Chinese market. Chief Executive Officer Gan Nu Kai and Chief Financial Officer Tan Zhi Rong had enlisted Singapore-based Devonshire Capital (Devonshire) as the IPO manager and underwriter. With six weeks left before the offering, Devonshire approached Gan and Tan with a suggested range for pricing the stock. Gan and Tan then began to carefully examine this recommendation and discuss how they would arrive at a reasonable offering price. CASH TECHNOLOGY LIMITED

CashTech designed, produced, distributed and serviced self-service banking equipment, including automated teller machines.
It began operating in December 1998 in Xiamen, in the Fujian Province of the People’s Republic of China (PRC) with a modest private equity investment of approximately S$2.3 million.1 Gan and his co-founders, who were engineers and veterans of other high-technology companies, had seen such equipment proliferate in the world’s more advanced economies and wished to develop solutions for their own country. They were part of a new breed of Chinese entrepreneurs who had left the safety and security of their previous employment to launch new, private ventures. They were dissatisfied with traditional employment, were tolerant of risk and wanted to capitalize on the PRC’s market liberalization. 1

Throughout this case, the following exchange rates should be followed: 2001: CNY/RMB1.00 = S$0.22, CNY/RMB1.00 = US$0.12
2002: CNY/RMB1.00 = S$0.22, CNY/RMB1.00 = US$0.12
2003: CNY/RMB1.00 = S$0.21, CNY/RMB1.00 = US$0.12

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In 1989 at the age of 22, Gan had earned a bachelor’s degree in engineering from a university in Guangzhou, the capital city of Guangdong Province. He had spent the next four years designing screens and peripherals for a nearby computer manufacturer. Seeking to broaden his experience, Gan relocated to Xiamen in Fujian Province in 1993 and became a production supervisor with a company that manufactured arcade video game machines. He later led a team in developing new, more durable materials for the machines’ display screens, a project that combined his research and design expertise with his natural management skills. Seeking a new challenge, Gan eventually persuaded some entrepreneurial friends to join him in founding CashTech.

In 1988, Tan had completed a bachelor’s degree in mathematics in Fuzhou, the capital of Fujian Province, and had also spent several years in the computer engineering field. His career took a turn into financial management in 1991 when he became a securities analyst with a state-owned bank. Tan later spent two years in the United States, perfecting his...
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