TSA Group aims to raise RM42.5 million from IPO
27 Dec 2023
TSA Group Bhd, a distributor and supplier of ferrous and non-ferrous metal and other industrial hardware products, as well as a manufacturer and processor of stainless steel pipes and other metal products, aims to raise RM42.53 million from its initial public offering (IPO) on the ACE Market.
TSA group managing director Chew Kuan Fah at the prospectus launch today stated, “The main objective of this listing exercise is for TSA to enter the Malaysian capital market and for business expansion.”
He said that from the RM42.53 million raised, 47% of it will be used to repay existing borrowings within five months of the listing. He explained that the move is a step towards solidifying the group’s financial base, reducing debt, and minimising interest costs, thereby enhancing financial resilience.
Another 29% of the proceeds raised are allocated towards strengthening its working capital over the next 36 months and in improving operational efficiency.
Simultaneously, it is investing 12% of the proceeds into the establishment of its Semenyih manufacturing premises.
Chew said that this investment is part of its growth strategy, and the plant will begin operations within 24 months post-listing. The remaining funds will cover the listing expenses.
TSA group primarily adopts a direct distribution channel. Customers buy its products for use in fabrication (47.5%), manufacturing (16.1%), construction (5.0%), and plant maintenance (4.6%).
Malaysia is TSA’s largest market, accounting for RM182 million (77.6%), RM239.7 million (79.2%), RM293.6 million (82.2%) and RM178.5 million (81.0%) of its total revenue in FY20, FY21 and FY23 respectively.
Its subsidiary, TSA Industries serves customers in Malaysia and other countries with the exception of Singapore and Batam, Indonesia which are mainly served by its subsidiary TSA Singapore.
In FY21, FY22 and FY23, Singapore was the group’s largest foreign market, contributing RM30.2 million (10%), RM39.6 million (11.1%), and RM32.7 million (14.8%) to its total revenue, respectively.
However, previously in FY20, Thailand held the position of its largest foreign market representing RM20.3 million (8.7%) of the company’s total revenue for the year.
Of the 77.33 million new shares, 15.46 million ordinary shares are open for application by the Malaysian public, another 15.46 million for eligible employees, 38.66 million via private placement to bumiputera investors approved by the Ministry of Investment, Trade and Industry, and 7.73 million through private placement to selected investors.
TSA will have a market capitalisation of RM170.12 million upon listing based on the issue price of RM0.55 per share.
AmInvestment Bank Bhd is the principal adviser, sponsor, underwriter, and placement agent for this IPO exercise.
TSA is scheduled to be listed on the ACE Market on Feb 2, 2024.
Source: The Sun
