This article first appeared in The Edge Financial Daily on December 19, 2017

KUALA LUMPUR: Nova Wellness Group Bhd, a pharmaceutical company, is seeking to float 82 million shares or 25.7% of the group’s enlarged share capital via its initial public offering (IPO) on the ACE Market of Bursa Malaysia.

According to the group’s draft prospectus exposure uploaded on the Securities Commission Malaysia’s website, 31 million shares or 9.7% stake of that will be for retail, while 51 million shares or 16% stake will be privately placed to identified or foreign institutional investors.

Under its retail offering, 16 million new shares will be made available for application by the Malaysian public, while the remaining 15 million shares will be set aside for the group’s eligible directors, employees or business associates.

While the IPO price for Nova Wellness shares have not been determined, the group said 36.6% of the proceeds raised will be used to construct a new Good Manufacturing Practice-compliant production facility, 25.7% will be for research and development activities, 11.1% for expansion of retail market presence, and 20.8% for working capital, with the remaining 5.8% to be used to defray estimated listing expenses.

Nova Wellness is in the nutraceutical industry and its principal activities are development, production and sales of nutraceutical and skincare products under its house brand and OEM development.

Nutraceuticals are products derived from food sources that provide health benefits in addition to its basic nutritional value. Examples of nutraceuticals include dietary supplements, herbal supplements and functional food.

Currently, the group has developed 45 dietary supplements, 11 functional food products and 24 skincare products sold locally and overseas under several house brands.

Under OEM services, Nova Wellness said it currently manufactures 72 dietary supplements and two functional food products under OEM brands. The group’s business was co-founded by its managing director Phang Nyie Lin and his wife Tan Sok Mooi.

The couple own the company now with their three sons, namely Phang Yeen Nung, Phang Yeen Aun and Phang Yeen Hung. Nyie Lin and his son own a 6.8% stake each in the company, while Tan owns the remaining 72.8% in Nova Wellness.

Subsequent to the IPO, Nyie Lin and his sons’ shareholdings will be diluted to 5.1% each, while Tan’s shareholding will be diluted to 53.9%.