KUALA LUMPUR (May 23): Eco-Shop Marketing Bhd (KL:ECOSHOP) rose 6% on its first day on the Main Market of Bursa Malaysia, after the dollar-store retail chain lowered the offering price of its shares.
Shares of Eco-Shop opened at RM1.25 on Friday, versus its initial public offering (IPO) price of RM1.13 per share. The stock eased but remained above water and ended Friday at RM1.20, after more than 200 million shares exchanged hands.
A day before the listing, Nomura and UOB Kay Hian initiated coverage on Eco-Shop with “buy” calls and target prices of RM1.35 to RM1.45.
The gain on Friday also injects more hope into Bursa Malaysia, which has recently suffered a slew of first-day listing flops and weakened investors demand.
Eco-Shop’s own IPO saw applications from retail investors barely covering the shares allocated, though the institutional tranche was fully taken up. The company then cut its final IPO price by about 7% ahead of the listing.
Gross proceeds totalled RM974 million, the largest since minimart operator 99 Speed Mart Retail Holdings Bhd’s IPO (KL:99SMART) raised RM2.36 billion in August 2024.
Before launching the IPO, Eco-Shop signed up 10 cornerstone investors — including AHAM Asset Management, Areca Capital Sdn Bhd, and Eastspring Investments Bhd — that collectively took up more than 90% of the institutional offering.
Cornerstone investors — typically large institutional investors such as pension funds and insurers — commit to take up a portion of IPO shares before they are marketed to other retail and institutional investors. Their presence helps to build up other investors’ confidence for the shares during the IPO.
The IPO raised RM392 million for Eco-Shop and another RM582 million for its selling shareholders that include founder and managing director Datuk Seri Lee Kar Whatt, as well as Creador — a private equity firm.
Creador is also the same firm that backed home improvement retailer Mr DIY Group (M) Bhd (KL:MRDIY).
Eco-Shop operates more than 350 stores nationwide, selling over 10,000 products that include third-party brands, ranging from daily essentials to household items, mostly priced at RM2.60.
Bulk of the proceeds from the IPO has been earmarked for expansion of its distribution centres and retail network. The company will also set aside some funds to repay bank loans, and upgrade its IT systems.
Maybank Investment Bank is acting as principal adviser, joint global coordinator, joint bookrunner and sole underwriter for the IPO. UBS Securities Malaysia and UBS AG Singapore are also joint global coordinators and bookrunners, while RHB Investment Bank joins as a joint bookrunner.