KUALA LUMPUR (March 11): Grocery chain operator 99 Speed Mart Retail Holdings Bhd has filed a draft prospectus to launch an initial public offering (IPO) that will see founder Lee Thiam Wah and his family letting go of 17% interest upon listing on Bursa Malaysia’s Main Market.
This confirms a report by The Edge in October last year that the home-grown retailer is mulling an IPO to raise as much as RM1.5 billion from the capital market to fund its expansion.
The draft prospectus filed with Securities Commission Malaysia on Monday also proposes a minimum public shareholding spread of 15%, versus the usual 25% as required by Bursa Malaysia.
99 Speed Mart is planning to sell 1.428 billion shares in its first-time share sale, comprising an offer for sale of up to 1.028 billion existing shares and a public issue of 400 million new shares.
The institutional offering involves 1.218 billion shares, representing 14.5% of the group’s enlarged issued share capital, and comprising 1.028 billion existing shares and 190 million new shares.
The retail offering, meanwhile, involves 210 million new shares, representing 2.5% of the group’s enlarged share capital. Of this, 42 million shares are reserved for eligible staff while 168 million shares will be offered to the Malaysian public.
The draft prospectus did not provide valuation-related information, but Bloomberg data shows that convenient store Mynews Holdings Bhd is trading at a forward price-to-earnings ratio (PER) of 34.67 times, while 7-Eleven Malaysia Holdings Bhd is trading at 27 times forward PER.
99 Speed Mart plans to utilise the proceeds from the IPO to expand its network of outlets, establish new distribution centres, purchase delivery trucks, and upgrade existing outlets.
The group will also allocate a portion of the proceeds to repay existing bank borrowings.
CIMB Investment Bank Bhd is the principal adviser, sole bookrunner, managing underwriter and underwriter for the IPO.
99 Speed Mart aims to have 3,000 outlets nationwide by the end of 2025, increasing from 2,542 outlets currently.
The group reported a net profit of RM293.69 million for the nine-month period ended Sept 30, 2023 (9MFY2023), up 48% from RM198.85 million in previous corresponding period, while revenue grew 15% to RM6.8 billion from RM5.91 billion.
In FY2022, full-year net profit contracted 22% to RM326.67 million from RM419.09 million in FY2021, while revenue grew 3% to RM8.07 billion from RM7.84 billion.
Upon completion of the IPO, Lee is expected to own a direct stake of up to 28.2% in the group, and an indirect interest of 51.5% through his private vehicle Lee LYG Holdings Sdn Bhd, with a six-month moratorium attached to the shareholdings.