KUALA LUMPUR (May 9): Eco-Shop Marketing Bhd’s initial public offering (IPO) price has been trimmed to RM1.13 per share for both retail and institutional investors, down 6.6% from the initial price of RM1.21 per share.
This was announced by the listing’s principal adviser Maybank Investment Bank Bhd, following the close of the institutional offering at 5pm on Thursday, Eco-Shop showed in a filing.
The IPO saw under-subscription for the retail Bumiputera portion, and overall retail oversubscription of 0.96 times for 114.94 million shares allocated to Malaysian retailers.
The institutional offering of 675.37 million shares was fully subscribed, it added. Earlier during the prospectus launch, Eco-Shop said it has secured commitments from 10 cornerstone investors, collectively subscribing for 90.91 million shares, representing 90.31% of the institutional offering (excluding the Bumiputera portion under the Ministry of Investment, Trade and Industry).
The group has maintained its IPO public issuance at 347 million shares. The lower IPO price brings its expected gross IPO proceeds to RM392.11 million, from RM419.87 million previously announced during the prospectus launch on April 29.
This will also cut its market capitalisation to RM6.49 billion upon listing, from RM6.95 billion.
The RM27.76 million difference sees Eco-Shop removing proceed utilisation for working capital purposes (RM24.7 million, according to the prospectus), as well as lower investments into information technology (IT) by about RM2.38 million.
At RM1.13, the IPO price values Eco-Shop at 36 times trailing price-earnings ratio (PER) based on its latest full-year net profit of RM177.28 million for the 12 months ended May 31, 2024 (FY2024).
This compares with peers like Mr DIY Group (M) Bhd (KL:MRDIY) at 26.9 times trailing PER, and other mini-mart chains like 99 Speed Mart Retail Holdings Bhd (KL:99SMART) — 39.2 times — and 7-Eleven Malaysia Holdings Bhd (KL:SEM) — 56 times — at Friday’s market close.
Famous for the RM2.60 price tag for the bulk of its household items sold, Eco-Shop had 358 stores nationwide as at end-March.
It now plans to use proceeds from the IPO as follows: RM200 million (51%) to expand distribution centres, RM100 million (25.5%) to repay bank loans, RM56.27 million (14.4%) to grow its retail network, RM8.52 million (2.2%) for IT investments, and RM27.32 million (7%) for listing expenses.
Eco-Shop is majority-owned by founder and managing director Datuk Seri Lee Kar Whatt, who holds an 80.3% direct stake, while Agathis Montana Sdn Bhd — a vehicle managed by Creador IV — holds a 10% stake. Creador is the same private equity firm backing Mr DIY Group.
Post-listing, Lee’s stake will be diluted to 73.1%, while Creador’s holding will be trimmed to 1.9%.
The group’s tentative listing date is on May 23.