This article first appeared in The Edge Financial Daily on November 14, 2018

KUALA LUMPUR: Industrial adhesive manufacturer Techbond Group Bhd, seeking to raise RM39.67 million from its initial public offering (IPO), will spend the bulk of the proceeds to finance its expansion in Vietnam. Managing director Lee Seng Thye said the existing factory there is operating at full capacity.

Currently selling its products in Vietnam — the group’s biggest market — it also exports to neighbouring Cambodia. Techbond plans to set up a new facility in Vietnam with a view of expanding sales to other Indo-China markets, Lee told reporters at the launch of the group’s IPO prospectus yesterday.

According to the prospectus, 72.5% of the IPO proceeds will be used to finance the group’s expansion in Vietnam — RM10 million to build the new factory, RM12.74 million to buy machinery and equipment, and RM6.04 million for working capital.

Techbond will also use the proceeds to expand its Malaysian operations — RM4.5 million to upgrade its factory complex in Kota Kemuning, Shah Alam and RM1.39 million for working capital. The remaining RM5 million of the proceeds will be used as listing expenses, the group said in its prospectus.

The public offer entails an issuance of 60.11 million new shares at 66 sen apiece. Of the number of shares, 11.5 million are for the Malaysian public and six million for eligible directors and employees.

Another 23 million shares are for application by way of private placement to government-approved bumiputera investors and the remaining 19.61 million shares placed out to selected investors. Techbond recorded a net profit of RM13.42 million for the financial year ended June 30, 2018 on revenue of RM86.81 million.

The application for the public issue closes on Nov 23 and the group is due to list on Bursa Malaysia’s Main Market on Dec 5. Based on the issue price of 66 sen and the enlarged share capital of 23 million shares, Techbond will have a market capitalisation of RM151.8 million upon listing.