Perked up for market debutBy Zurinna Raja Adam
KUALA LUMPUR: OldTown White Coffee chain operator, OldTown Bhd, which expects to raise RM79.2 million from its initial public offering (IPO), is optimistic that it will not be another listing slump.
Recent IPOs like XOX Bhd, UOA Development Bhd, MCLean Technologies Bhd and Ideal Jacobs (Malaysia) Corp Bhd have had weak debuts on Bursa Malaysia and struggled to maintain their momentum.
"I think we shouldn't compare OldTown's IPO to the failed IPOs because unlike other companies, OldTown is a brand that consumers can relate to. It is visible everywhere," said AmInvestment Bank director head of corporate finance Anuar Omar.
He said he was confident of its listing performance as OldTown's private placement had received overwhelming response.
"It is the right time for the company to tap the capital market to fund its expansion," he said during the group's prospectus launch in Kuala Lumpur yesterday.
AmInvestment Bank is the principal adviser, managing underwriter and joint placement agent for the IPO. CIMB Investment Bank Bhd is the joint underwriter and joint placement agent.
OldTown group managing direc-tor Lee Siew Heng said the company will invest RM52 million to build a plant on a 3.6ha site in Ipoh, Perak. It will be its central location for manufacturing instant beverage mixes and roasting coffee powder.
Once completed in 2013, the new plant will increase OldTown's production capacity by 500 per cent.
Lee said the company also plans to open 300 outlets in three years from 182 currently, in Malaysia, Indonesia and Singapore.
"This year, we plan to open 38 outlets, of which 31 are in Malaysia, three in Singapore and four in Indonesia, with average investment of RM700,000 per outlet," he said.
Post-listing, OldTown plans to export its instant coffee mix, instant milk tea mix and roasted coffee powder to countries like China and Iran. Currently, it is exporting to Singapore, Hong Kong, the US, the UK, Canada and Australia.
Last year, the company posted some RM79 million in revenue. Of this, 65 per cent was derived from its food and beverage outlets and the remaining from fast moving consumer goods (FMCG), including 20 per cent (of its FMCG sales) from export markets.
OldTown is expected to be listed on the Main Market on July 13. Its IPO involves a public issue of 63.4 million new shares and an offer for sale of 33 million vendor shares at RM1.25 each.