This article first appeared in The Edge Malaysia Weekly on October 9, 2023 - October 15, 2023
TALK is swirling in retail circles that 99 Speed Mart Sdn Bhd, the home-grown operator of the 99 Speedmart grocery chain, is headed for a listing on Bursa Malaysia. The initial public offering (IPO) may take place in the second half of 2024, sources say.
They say the retailer is looking to raise as much as RM1.5 billion from the IPO and that CIMB Investment Bank Bhd has been mandated to handle the listing exercise.
99 Speedmart, which started as a mom-and-pop store, Pasar Raya Hiap Hoe, in 1987 and subsequently upgraded to a mini market named Pasar Mini 99, was founded by Lee Thiam Wah. Lee owns 96% of 99 Speed Mart shares and his wife Ng Lee Tieng the remaining 4% stake.
When contacted for confirmation and details of the planned IPO, Ng said: “Thank you for your interest in the future of our company. We don’t have any information to provide you at the moment.”
Details of the planned listing and why Lee decided to list the business remain sketchy. It is learnt that Lee had always shied away from investment bankers who had courted him and proposed a listing. Sources say this time Lee himself had approached an investment bank to look into the possibility of listing. However, nothing has been set in stone.
According to two separate sources, the market valuation will be close to or surpass that of Mr DIY Group (M) Bhd. Mr DIY, which was listed in 2020, raised RM1.5 billion from its IPO.
There is no publicly available data on the performance of 99 Speed Mart as it has been made private exempt. A private exempt company must be solvent and not have more than 20 individuals as shareholders.
In a previous interview with The Edge, Lee had said that 99 Speed Mart achieved RM1 billion in sales for the financial year ended Dec 31, 2011 (FY2011) when it hit 300 stores and RM2 billion when it reached 600 stores in FY2014.
Based on these figures, the retailer may have raked in as much as RM8 billion in revenue in FY2022. 99 Speed Mart now has 2,463 stores and hopes to cross 2,500 stores by year end. According to information on its website, the retailer will add 11 new stores between Oct 6 and 15.
Meanwhile, a source estimates that in FY2021, the retailer posted a net profit of RM550 million on revenue of RM7 billion. The profit margins are traditionally thin in the grocery business.
What does Lee plan to do with the proceeds raised from the IPO?
One source says that 99 Speed Mart hopes to expand its business into new regional markets such as Singapore, the Philippines, Indonesia and Vietnam. At the same time, the source does not discount the fact that Lee, who is known for his generosity and philanthropy, possibly wants to reward and share the wealth with his staff, which has grown in number and continues to increase as the retailer expands.
In recent years, retailers have been raising capital by listing shares on the exchange. The year 2020 saw the listing of Mr DIY, followed by Farm Fresh Bhd in 2021.
Private equity firm Creador, which was instrumental in helping Mr DIY expand and eventually list the company, recently acquired the Caring Pharmacy chain via Big Pharmacy Holdings Bhd. Creador plans to list the business in the next three years.
In May, The Edge reported that mini-market operator KK Supermart & Superstore Sdn Bhd, which generates about RM1 billion in annual revenue, is also considering an IPO, possibly within the next one to three years.
“99 Speed Mart has fulfilled a niche in the grocery retail chain between higher value grocery chains such as Village Grocer and Jaya Grocer and the purchase of groceries online. As customers have evolved to buy smaller amounts of groceries on a more frequent basis, 99 Speed Mart has benefited from this trend by having many outlets closer to the consumers rather than the large hypermarkets of previous years,” Chris Eng, chief strategy officer at Etiqa Insurance and Takaful tells The Edge.
Eng adds that given the renewed interest by foreign investors in Malaysian equities, albeit focused on property, construction and power for now, it makes sense for retailers to also attempt listings.
“The recent successful IPOs of Mr DIY and Farm Fresh would also serve as encouragement,” he says, adding that retail is an easy business for both retail and foreign investors to understand.
Lee had previously stated that he envisions a future where his 99 Speedmart stores can be found in every corner of the country and within easy reach of everyone.
Apart from the 99 Speedmart grocery chain, Lee also wholly owns Careon Pharmacy Sdn Bhd, the retail pharmacy chain established in 2020. He is also involved in the Burger King restaurant business, following the acquisition of the chain in Malaysia and Singapore from Ekuiti Nasional Bhd for RM74.6 million in 2015. Lee also holds a 72% stake in the Ali, Muthu and Ah Hock kopitiam-styled restaurant chain.
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