KUALA LUMPUR (July 3): Eckem Holdings Bhd (KL:ECKEM) was flat in its ACE Market trading debut as the industrial chemicals distributor underperformed the broader market on Friday.

Shares of Eckem ended at 12 sen, unchanged from its initial public offering (IPO) price, after more than 82 million shares changed hands. The stock was just up one sen at its highest point during the day.

The company’s market capitalisation stood at RM75 million based on its closing price.

Eckem, nevertheless, is benefitting from a strong market even as its shares were only oversubscribed by about eight times by retail investors ahead of the listing.

Headquartered in Shah Alam, Eckem mainly sells specialty industrial resins, pigments, and additives used in paints, construction materials, personal protective equipment, inks, household products, and adhesives.

The company also manufactures rubber products, including dental dams and latex sheets, as well as lifestyle products such as exercise bands. Last year, the company made a net profit of RM4.5 million on revenue of RM38.6 million.

“We are hoping to double our capacity so that we can grow our revenue,” said Eckem Holdings executive director Tan Khai Jeik. “We will also use the proceeds to build new warehouses and upgrade our current capacity so that we can better serve our customers.”

There are many data centres under construction that still require technical materials, said Tan. “Those tech companies are our current customers… we believe that our customers will continue to develop, and they will continue to sustainably do business with us,” he added.

The IPO raised RM15 million for Eckem from public issue of new shares while founder Tan Kwang Wah, his wife, and two sons together reaped RM7.5 million from an offer for sale of their existing shares.

Eckem is setting aside 40% of the funds raised from the public issue for construction of a new corporate office, warehouse and laboratory. The company is allocating 13% of the proceeds for expansion of a new production line for rubber products.

The rest will be used to repay bank borrowings, as working capital, and to cover listing expenses.The Tan family holds about 68% in the company post-listing through their private vehicle Trinity Equity Sdn Bhd. Kwang Wah is the managing director of Eckem, while his sons Khai Jeik is an executive director in charge of business development and Khai Wen is the chief operating officer.

M&A Securities is the adviser, sponsor, underwriter and placement agent for the IPO.

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