KUALA LUMPUR: Food ingredients supplier Agricore CS Holdings Bhd expects to generate RM25.9 million from its initial public offering (IPO) en route to a listing on the ACE Market of Bursa Malaysia.
As part of the listing process, Agricore will release 51.7 million new shares, which will constitute 25.5 per cent of the enlarged share capital, at 50 sen each.
Out of the 51.7 million new shares, 10.1 million will be offered to the public through balloting, and another 10.1 million for eligible directors, employees, and individuals who have contributed to the success of Agricore Group under the 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 while the remaining 6.1 million new shares will be allocated by way of private placement to selected investors," it said.
Agricore is projected to have a market capitalisation of RM101.4 million.
The company intends to allocate 74 per cent of the proceeds from the IPO to expand its sourcing and distribution business by increasing inventory levels at its Bukit Minyak premises and the new regional storage facility in Klang.
Agricore managing director Oon Boon Khong said by increasing inventory levels, the company aims to boost revenue growth through higher sales volumes to existing customers and the acquisition of new customers.
"The remaining RM5.2 million will be utilised to purchase inventory for the new regional storage facility in Klang, Selangor," he added.
RM2.7 million, or 10 per ceny of the proceeds, will be allocated to enhance storage capacity by establishing a new regional storage facility in Klang, covering approximately 30,000 square feet.
Oon said having a regional storage facility will allow the company to offload some products in Port Klang for storage.
"This will help us save on logistics cost and subsequently transportation cost when the products are delivered directly from our new regional storage facility to our customers in the central and southern regions of Peninsular Malaysia.
"Our new regional storage facility is expected to save approximately RM0.7 million logistics cost and transportation cost per year," he added.
Agricore's listing on is set for June 21.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO.