KUALA LUMPUR: Food ingredients supplier Agricore CS Holdings Bhd, en route for a listing on the ACE Market of Bursa Malaysia, expects to raise RM25.9mil from its initial public officer (IPO).
Agricore plans to use RM18.9mil (74%) raised from the IPO to further expand its sourcing and distribution business by increasing inventory levels at Bukit Minyak Premises and its new regional storage facility in Klang, Selangor.
Managing director Oon Boon Khong said through higher inventory levels, the company will be able to drive its revenue growth by increasing its sales volume to the existing customers as well as securing new customers.
“The total estimated cost for the expansion of our sourcing and distribution business through increasing our inventory levels is RM18.9mil, of which RM13.7mil will be utilised to purchase inventory for our Bukit Minyak Premises and the remaining RM5.2mil will be utilised to purchase inventory for the new regional storage facility in Klang, Selangor,” he said in a statement.
Agricore said a further RM2.7mil (10%) of the proceeds will be used to increase its storage capacity by setting up a new regional storage facility in Klang, Selangor, with an approximate built-up area of 30,000 sq ft.
Currently, all Agricore’s plant-based agricultural products are stored in the Bukit Minyak Premises prior to delivery to the customers. The utilisation rates of the storage space at Bukit Minyak Premises were recorded at an average of 91.1% for financial year ended Dec 31, 2020 (FY20) to FY23.
The remainder of the proceeds will be allocated to recruit additional staff in Bukit Minyak Premises amounting to RM0.6mil (2%) to support the expected future business growth and to defray the estimated listing expenses of RM3.7mil (14%).
Under the listing exercise, Agricore is issuing 51.7 million new shares, representing 25.5% of the enlarged share capital at an issue price of 50 sen per share.
Of the 51.7 million new shares, 10.1 million new shares will be made available to the Malaysian public via balloting and 10.1 million new shares for its eligible directors, employees and persons who have contributed to the success of Agricore Group under Pink Form Allocations
Meanwhile, 25.4 million new shares will be placed out to Bumiputera investors approved by the Ministry of Investment, Trade and Industry (MITI) while the remaining 6.1 million new shares will be allocated by way of private placement to selected investors.
Based on the enlarged share capital of 202.8 million shares, Agricore is expected to have a market capitalisation of RM101.4mil after listing.
Agricore’s listing on the ACE Market of Bursa Malaysia is tentatively scheduled on June 21. The IPO is open for subscription from today to June 7.
M & A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.