KUALA LUMPUR (March 6): Japan’s Nippon Steel, one of the world’s largest steelmakers, has agreed to invest RM25 million for a 10% stake in Leform Bhd (KL:LEFORM) in a primary share deal.

Proceeds from the private placement of new shares have been earmarked for the purchase of raw materials, improve delivery efficiency, and procure steel materials ahead of anticipated price increases to enhance gross profit margins, Leform said in a statement.

“This strategic investment not only strengthens our capital base but also creates potential synergies that may enhance our supply chain resilience and market reach,” said Leform managing director Law Kok Thye.

Under the proposed deal, Nippon Steel Trading Corporation’s local subsidiary NST Trading Malaysia Sdn Bhd will subscribe 143.1 million new shares of Leform. The price of 16.88 sen per share was set based on a discount to the five-day volume weighted average market price.

Nippon Steel Trading is the trading arm of Tokyo-headquartered Nippon Steel, the world’s fourth-biggest crude steel producer by volume.

Leform, which specialises in steel pipes and flat steel products, said it believes the collaboration will complement its existing operations and reinforce its position within Malaysia’s steel supply chain ecosystem.

On its part, Leform said it will continue “to focus on expanding its operational capabilities, including the imminent operational commencement of its integrated warehouse facility in Serendah, which is expected to further enhance inventory management and logistics efficiency.”