KUALA LUMPUR (Sept 27): Food and supplement maker OB Holdings Bhd has begun accepting applications from investors for its initial public offering (IPO) to raise RM28.8 million on the ACE Market.
The IPO, priced at 24 sen per share, comprises a public issuance of 120 million new ordinary shares, offering investors a 30.64% stake in the company, according to its official prospectus launched on Friday. The company has opted not to sell any existing shares.
The application period for the IPO is set to close on Oct 15, with a tentative listing date set for Oct 29.
OB Holdings mainly manufactures the so-called fortified food and dietary supplements under various house brands, as well as for third-party brand owners. Its in-house product line includes softgel capsules, hard capsules, effervescent tablets, and teabags.
The company also offers contract packing services for various products, such as milk powder, tea leaves, honey, herb powder, fruit powder, and liquid chlorophyll into retail packaging sizes, along with the trading of milk powder and other activities.
“Our upcoming IPO comes at an opportune time, coinciding with growing demand for fortified food and beverage and dietary supplements,” OB Holdings managing director Teoh Eng Sia said. Demand is driven by rising health awareness, chronic diseases, urbanisation, and a growing ageing population, he noted.
At the IPO price, OB Holdings would have a market capitalisation of RM93.99 million, valuing the company at 17 times the profit after tax of RM5.5 million for the financial year ended May 31, 2024 (FY2024).
Under the public issue, OB Holdings is offering 19.6 million new shares to the Malaysian public via balloting, and another 7.8 million shares made available to eligible persons. The remaining shares will be issued through private placement to select investors and approved Bumiputera investors.
More than half of the total RM28.8 million to be raised through the IPO has been allocated to repay bank borrowings incurred from the construction of a new factory in Serendah.
“This move will enable us to optimise our manufacturing workflow, and position us to cater to increasing demand for our products and services,” Teoh said.
OB Holdings is also setting aside RM5 million from the IPO proceeds for the purchase of new machines, and RM900,000 for the setup of a new laboratory in the Serendah factory to facilitate its Bonlife SachaQ10 Plus Softgel clinical trial.
The company will utilise RM3 million for working capital, RM1 million for marketing, and RM4 million to cover IPO-related expenses.
Teoh and his wife Wong Chung Theng, each owning 50% of the company, will see their stakes diluted to 19.68% after the listing. They will still hold a combined 30% stake via their private company, Goodone Holdings Sdn Bhd.
Alliance Islamic Bank is the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise.