KUALA LUMPUR (July 9): RichTech Digital Bhd, which distributes electronic reloads and provides bill payment services, filed for an initial public offering (IPO) on ACE Market to raise funds for marketing activities and acquire a new office.

The proposed IPO involves a public issue of 54.66 million new shares and an offer-for-sale of 25.31 million existing shares at a price to be determined later, according to its draft prospectus posted to Bursa Malaysia. All in all, the listing offers investors up to a 39.5% stake in the company.

“We intend to expand our user base” on the so-called SRS platform that has corporate users and end-users," RichTech said. According to the company, end-users account for less than 1% of gross sales and it intends to offer rewards such as discount vouchers to encourage usage and new signups.

RichTech started in 2011 distributing electronic reloads for mobile airtime and data via an SMS reload system and a web portal onlinereload.net, presently known as the SRS Portal. The company has since expanded the service to include payment of utility bills, quit rent and assessment, and game credits.

The company claims that it now has some 32,000 end-users and a network of more than 1,000 corporate accounts that provide access to over four million users. In the financial year ended December 2023, RichTech made a net profit of RM5.37 million on revenue of RM7.8 million.

Under the IPO’s public issue, RichTech will make 10.12 million new shares available for the Malaysian public and set aside 1.55 million new shares for eligible persons. The company will also sell 42.99 million new shares to select investors through private placement.

Part of the proceeds will also go towards the acquisition of a new office that could accommodate its headquarters and branch office under one roof with an estimated built-up area of up to 6,000 square feet.

The company will use the rest of the proceeds as general working capital to buy stocks for electronic reload services which account for more than 70% of its annual purchases, and to defray estimated listing expenses.

Proceeds from the offer-for-sale of existing shares will meanwhile accrue entirely to selling shareholders, including managing director Lee Teik Keong and substantial shareholder Yau Ming Teck, who will cut his holdings to 4.61% post-IPO from 9.70%.

Yau is also a director of Lotus KFM Bhd and HLT Global Bhd as well as a substantial shareholder of MESB Bhd and Lotus KFM.

KAF Investment Bank is the IPO’s principal adviser, sponsor, underwriter and placement agent.