KUALA LUMPUR (May 2): Smart Asia Chemical Bhd, an industrial paint and coating manufacturer, on Thursday has begun taking orders from investors for its ACE Market initial public offering (IPO) that would raise up to RM37.4 million.
The IPO, priced at 40 sen per share, comprises entirely of 93.5 million new shares offering investors up to 25.28% of its enlarged shares, according to its prospectus launched. There is no sale of existing shares.
The application will close on May 13, with the listing scheduled for May 28.
Smart Asia Chemical’s primary operations involve developing, manufacturing, distributing, and selling a diverse array of decorative paints, protective coatings for both household and industrial use, and other paint-related products.
The group currently has nine wholesalers and 937 dealers in Malaysia, along with 14 authorised distributors in overseas markets, including Singapore, Brunei, Indonesia, Cambodia, Vietnam, and Myanmar.
Under the public issue, 18.48 million shares will be made available to the Malaysian public via balloting while 16.68 million will be allocated to selected investors. The IPO also involves private placement of 46.23 million IPO shares to Bumiputera investors and 12.1 million shares set aside for eligible persons.
The company earmarked about 43% of the proceeds, or RM16 million, to partially finance the construction of a plant in Perak while RM11 million will be used for the purchase and commissioning of an automated paint production system.
In addition, RM5 million of the proceeds will be used for the purchase of 250 sets of smart colour POS tinting machines, and the remaining RM1.3 million will be allocated for working capital, and RM4.1 million to defray listing-related expenses.
At the listing price of 40 sen per share, Smart Asia Chemical will be valued at 14.9 times the profit after tax of RM10 million for the financial year of 2023 after adjusting for the listing expenses incurred. The company would be valued at RM147.9 million on listing.
The IPO will reduce the direct stake of managing director Goh Chye Hin to 44.5% and to 7.51% for his wife Kee Hui Lang, who is also the non-independent executive director.
Based on Smart Asia Chemical’s share base of 276.35 million shares, Goh owns a 59.55% stake in the company, while Kee owns 10.05%. The 3.62% indirect stake they hold via their children is expected to be diluted to 2.7%.
Mercury Securities Sdn Bhd is the IPO’s principal adviser, sponsor, underwriter, and sole placement agent.