KUALA LUMPUR (March 13): Saliran Group Bhd (KL:SALIRAN) eked out tiny gains in its first ever trade on the ACE Market before falling below its initial public offering price (IPO) less than a second later.
The stock opened at 27.5 sen versus its IPO price of 27 sen per share. However, Saliran then began falling and touched as low as 22 sen. The stock was trading at 22.5 sen at 9.15am after nearly 39 million shares changed hands.
The debut flop comes on the heels of another listing which also sank underwater on the first day of trading. Pantech Global Bhd (KL:PGLOBAL), a pipe manufacturing company, fell 15% below its IPO price at the end of its debut on March 3.
Saliran failed to catch the wave of a broader rebound in a market heavily-sold down over the past few days. The strong showing during its IPO applications also failed to follow through.
Demand from retail investors for a slice of the company exceeded available shares by more than 76 times at the close of IPO applications.
Shares allocated to eligible persons were also fully subscribed, while new shares for select investors through private placement were also fully taken up. Investors also fully bought up an offer-for-sale of existing shares.
The IPO raised about RM32 million from the issuance of 80.4 million new shares and 38.29 million existing shares at 27 sen each. The listing offered up to a 31% stake in the company.
Saliran Group is a supplier and distributor of pipes, fittings and flanges, as well as related parts and accessories, and steel products. The company has more than 19,000 unique products used in the oil and gas industry to support processing, refining and manufacturing activities.
More than one-third of the proceeds from the public issue has been earmarked for general working capital, with the company also allocating 32% for repayment of bank borrowings. The company will spend 5.5% of proceeds to set up a sales office in Indonesia and 6.6% to buy machinery and delivery trucks.
The rest will be go towards defraying listing expenses.
The public issue involved 19.15 million new shares for application by the Malaysian public, 7.66 million shares for eligible persons, and private placements totalling 54 million shares for approved Bumiputera and select investors.
Proceeds from the offer for sale to select investors accrue entirely to a private company controlled by Saliran Group managing director Dennis Liaw Choon Wei, executive director William Chan and chief operations officer Lim Bak Teik.
Malacca Securities Sdn Bhd is the IPO’s principal adviser, sponsor, underwriter and placement agent.