KUALA LUMPUR (July 23): Well Chip Group Bhd (KL:WELLCHIP) ended its first day on the Main Market with a 50% gain, after the Johor-based pawnbroker raised RM172.5 million from its initial public offering (IPO).
The stock opened at RM1.65 versus its IPO price of RM1.15 per share. Well Chip climbed to as high as RM1.75 before closing at RM1.72 on Tuesday. Trading volume totalled over 106 million shares and it was also one of the most active stocks on Bursa Malaysia.
Tuesday’s gain added RM342 million to Well Chip’s market value, the biggest increase for a new listing since Keyfield International Bhd’s (KL:KEYFIELD) debut on April 22. The closing price gave Well Chip a market capitalisation of RM1.03 billion, well above the RM690 million implied by its IPO price.
The first-day pop follows strong demand during the IPO.
The public tranche was oversubscribed by 12.87 times. Under the institutional offering, IPO shares set aside for Bumiputera investors and for institutional and selected investors were also fully placed out.
The company’s IPO comprised entirely of new shares. Under the public issue, Well Chip offered 30 million new shares to the Malaysian public, of which half were set aside for Bumiputera public investors.
The institutional offering, meanwhile, involved 45 million shares for institutional and select investors through private placement, and another 75 million shares made available to approved Bumiputera investors, also through private placement.
Proceeds from the IPO will be used as working capital to increase the company's pledge book, which in turn is expected to contribute to revenue, and as initial set-up costs and working capital for the new pawnshops to be opened. The rest will be used to defray listing expenses.
Singapore-based ValueMax Group Ltd, controlled by Yeah Holdings Pte Ltd, is the largest shareholder of Well Chip with a 65.5% indirect stake — with 50.7% held through VYN Holdings and 14.8% through VMM Holdings.
Kenanga Investment Bank is the principal adviser for the IPO. Together with CGS International Securities Malaysia, Kenanga is also a joint underwriter and joint placement agent for the exercise.