This article first appeared in The Edge Malaysia Weekly on December 27, 2021 - January 2, 2022

INARI Amertron Bhd’s private placement exercise of 333 million of its shares, representing 10% of its share capital pre-placement and 9.1% of its enlarged capital post-placement, successfully raised RM1.03 billion.

Taking place in the third quarter of 2021, the placement was also timely as it coincided with the global chips shortage, which boosted the need for more assembly and testing services.

An outsourced semiconductor assembly and test services company, Inari had earmarked the proceeds of the placement for capital expenditure, in particular for capacity expansion plans.

The issue price of the placement — fixed on July 19 — at RM3.10 per share, represented a discount of 2.72% to the five-day volume-weighted average price of Inari shares up to and including July 16, being the market day immediately prior to the price-fixing date, of RM3.1868 per share.

CIMB Investment Bank, the joint placement agent for the exercise, said the deal was priced in a timely manner, on a Sunday evening during the transaction week, just ahead of the market’s lacklustre performance on July 19 and investors’ growing concerns of the economic implications stemming from a resurgence in Covid-19 cases.

The KLCI ended 2.51 points or 0.16% lower on that date, while Inari shares ended the day flat at RM3.13.

Compared with its closing price of RM2.66 on Dec 31 last year and up the announcement of the placement exercise on May 6, Inari shares have appreciated by 19%.

“The primary placement was also timed perfectly, as it took advantage of the share price rally that Inari has experienced. It received overwhelming demand and was well oversubscribed, with the final book consisting of a high-quality mix of long-only and ultra-high-net-worth investors,” says CIMB.

Since the completion of its placement exercise on July 30, Inari shares have appreciated by 14% to close at RM3.84 last Wednesday, which translates into a market capitalisation of RM14.2 billion. The company now has a strong war chest to capitalise on synergistic acquisitions to reap future economic benefits for the group — its cash balance as at Sept 30 stood at RM1.87 billion, with nil borrowings.

Home improvement retailer MR DIY Group (M) Bhd’s RM846 million block placement by one of its largest shareholders, Hyptis Ltd, a special purpose vehicle of private equity firm Creador, is the first public equity offering from the group since its October 2020 initial public offering (IPO).

The deal deserves a notable mention, as it was upsized by 48.3% from its base offer of 158.5 million shares to raise RM570.6 million, to an enhanced offering of 235 million shares, raising RM846.4 million following an accelerated book-building exercise.

The placement offer price of RM3.60 per share represented a 5.26% discount to MR DIY’s closing price of RM3.80 as at Aug 24, 2021, which is the pricing date for the deal. This is also more than double of MR DIY’s IPO price of RM1.60 per share.

Since its IPO, MR DIY’s share price has more than doubled to close at RM3.42 last Wednesday, giving the company a valuation of RM21.5 billion.

JP Morgan acted as the joint placing agent for Creador’s secondary selldown while Credit Suisse was the joint bookrunner. According to JP Morgan, the book was well covered by government-linked funds, existing holders, international long-only and local investors, as well as multi-strategy funds.

“Allocations were concentrated with top 10 investors receiving over 80% of the book,” says JP Morgan.

Another deal which deserves a notable mention is automotive LED supplier D&O Green Technologies Bhd’s primary placement of 38.5 million shares, representing 3.2% of its outstanding shares and approximately 3.1% of its enlarged capital post-placement, to raise RM216.4 million.

The proceeds raised will be primarily used as capital expenditure to part-finance the construction of the D&O Group’s third manufacturing plant, an eight-storey building with an overall floor space of approximately 60,000 sq m located between the group’s two existing manufacturing plants.

Maybank Investment Bank (IB) was the sole placement agent for the deal.

“The transaction was priced at RM5.62 per share, representing a tight 0.8% and 3.1% to the five-day volume-weighted average price and last closing price of D&O shares on Nov 19. It was priced at the tightest discount since 2011 among Maybank IB’s primary placement transactions,” says the investment bank.

The offering received strong pre-launch demand, which was sustained and successfully converted at launch, resulting in the book being multiple times subscribed with no price sensitivity. The placement was anchored by quality long-only investors, and allocations were concentrated with the top five investors accounting for over 75% of allocations.

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