This article first appeared in The Edge Financial Daily on October 4, 2018

KUALA LUMPUR: HPMT Holdings Bhd, a manufacturer and distributor of cutting tools, has proposed an initial public offering (IPO) of 116.62 million shares en route to a listing on the Main Market of Bursa Malaysia.

According to its draft prospectus posted on the Securities Commission Malaysia’s website, the offering includes 75.55 million new shares or 23% of the group’s enlarged issued capital of 328.49 million.

Of this total, 16.43 million shares (5% of the enlarged issued capital) will be made available for application by the Malaysian public, 8.3 million shares (2.5%) for application by eligible directors and employees, and 50.83 (15.5%) for application by way of private placement to institutional and selected investors.

Meanwhile, the selling shareholders are offering 41.06 million shares, representing 12.5% of its enlarged share capital, at the IPO price by way of placement to government-approved Bumiputera investors, and institutional and selected investors.

The issue price has yet to be fixed, the group said.

HPMT, which as at the date of the prospectus has an issued share capital of 252.94 million shares worth RM63.23 million, is also engaged in supporting equipment and accessories for metalworking, as well as providing physical vapour deposition coating services.

The group said that out of the total proceeds of the IPO, 70.3% will be used to purchase new machinery and equipment, while 18.5% will be used for working capital and the remaining 11.2% for listing expenses.

“With the expected increase in demand for our products, we intend to expand our production capacity via the purchase of new machineries and equipment,” said HPMT.

“We have established a strong sales network, with particular focus in Europe and Asia,” said HPMT, adding that to date, it has four subsidiaries based in Malaysia, Germany, Hong Kong and China to facilitate distribution of our cutting tools and trading of third-party cutting tools, and supporting equipment and accessories for metalworking.

For the financial year ended Dec 31, 2017, HPMT registered a net profit of RM14.84 million, which is 18.09% higher compared with the previous year’s RM12.56 million.