KUALA LUMPUR (Dec 22): Well Chip Group Bhd is offering 150 million new shares in an initial public offering (IPO), representing 25% of its enlarged issued share capital, as it seeks a listing on the Main Market of Bursa Malaysia.

The 150 million shares comprise a public offering of 30 million shares via balloting, 45 million new shares for private placement to institutional selected investors and 75 million new shares for private placement to Bumiputera investors approved by the Ministry of Investment, Trade and Industry (Miti).

Well Chip is involved in the provision of pawnbroking services and business of retail and trading of jewellery. Currently, the group has 26 operating outlets in Johor, comprising 22 pawnshops and four retail outlets which are adjacent to its pawnshops.

According to its draft prospectus released on the Securities Commission’s website, the group intends to utilise the IPO proceeds for the initial set up costs and working capital requirements for eight new pawnshops in Johor and Melaka.

“We intend to pursue this expansion strategy by leveraging on our strength and experience from our existing operations in Johor. After our first venture into Melaka, we intend to first develop and expand our network of pawnshops within Melaka for a wider market reach by setting up new pawnshops. Thereafter, we plan to venture into Negeri Sembilan,” the prospectus read.

The group’s profit after tax (PAT) increased by 5.79% to RM25.16 million for the financial year 2022 (FY2022) from RM23.78 million in FY2021, as revenue jumped 55% to RM158.12 million from RM101.88 million a year earlier, mainly due to higher revenue from both the pawnbroking as well as retail and trading of jewellery and gold segments, following the upliftment of the movement control order.

On its dividend policy, Well Chip plans to distribute dividends of at least 35% of its consolidated PAT attributed to shareholders for the first three financial years after its listing.

Kenanga Investment Bank Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO.