KUALA LUMPUR (Oct 24): Cuckoo International (MAL) Bhd, the local unit of South Korean appliance maker, has filed for an initial public offering (IPO) on the Main Market of Bursa Malaysia to raise funds for expansion.

The proposed IPO involves an offer for sale of existing shares and a public issue of new shares at a price to be determined later, according to the draft prospectus. The listing would offer up to 25.5% stake in the company that sells and rents out appliances ranging from water purifiers to treadmills.

“The growth of our rental business is dependent on the availability of cash flows to fund the upfront purchase of products,” Cuckoo said. “We intend to allocate the proceeds to fund upfront purchase of products to meet the growing demand for rental plans in Malaysia.”

Cuckoo Homesys Co Ltd, listed in South Korea and mostly known for its rice cookers, currently controls 63% in Cuckoo International and also supplies the Malaysian subsidiary with its products.

Cuckoo International also partnered Lee Swee Kiat Group Bhd (KL:LSK) to make mattresses, Fujiaire for air-conditioners, and Ogawa for massage chairs. Last year, Cuckoo International made RM86.87 million net profit from RM1 billion in revenue.

Proceeds from the public issue of 143.28 million shares will also be used to part-repay bank borrowings, fund expansion of its retail store network, and finance growth of its Singapore operations. The rest will be used to defray listing expenses.

Meanwhile, any funds raised from the offer for sale of 222.08 million existing shares will accrue entirely to a group of South Korean and Malaysian shareholders including Cuckoo International chief executive officer Hoe Kian Choon and his wife Mak Foong Ling.

RHB Investment Bank is the sole principal adviser and managing underwriter as well as joint global coordinator, bookrunner, and underwriter with AmInvestment Bank.