PETALING JAYA: Dancomech Holdings Bhd, a process control equipment and measurement instruments distributor, is looking to list on the Main Market of Bursa Malaysia with an initial public offering (IPO) of 24 million shares.
According to its draft prospectus on the Securities Commission Malaysia website, its IPO involves the issuance of 24 million new shares, including the public issue of 7.5 million shares or 5.03% of its enlarged issued and paid-up share capital and 2.5 million shares or 1.68% for eligible directors, employees and persons who have contributed to the success of the group.
Some 14 million shares will be available to bumiputra investors to be approved by Ministry of International Trade and Industry (Miti).
The promoters of the IPO comprise the company’s director Aik Cwo Shing and Aik Swee Tong, along with its major shareholders who collectively hold a 73.15% stake in Dancomech.
It plans to utilise the proceeds of its IPO for repayment of bank borrowings, purchase of offices-cum-stores and equipment as well as working capital.
The balance will be used to defray the listing expenses incurred during the corporate exercise.
Dancomech plans to purchase a new office-cum-store in Johor Baru, to enable it to implement its business strategies, market coverage expansion and strengthen its position in Johor.
“We believe the demand for our products in Johor will increase in light of the Refinery and Petrochemical Integrated Development (Rapid) in Pengerang, Johor,” it added.
The company also plans to use part of its proceeds to expand its market presence in Sabah and Sarawak to enhance its ability to service its customers there by establishing an office to improve the delivery time of products.
It has decided to set up offices in Lahad Datu, Sabah and Bintulu, Sarawak, as it considers those areas as the centre of palm oil and oleochemicals, as well as oil and gas petrochemical activities.
Dancomech said the purchase of the new office-cum-stores will increase the number of customers in Johor, Sabah and Sarawak.
“As a result we expect our sales to increase, thus contributing positively to our group’s future earnings,” it said.
The company plans to upgrade its testing laboratory within 12 months after its listing to enable it to conduct better safety valves testing and repair services.
“We will purchase additional fittings, tools and machineries,” it added.
Dancomech also intends to set up a stainless steel flexible hose assembly line, which is in line with its future business plans and product expansion.
DANCO (5276) - IPO: Dancomech eyes Main Market listing