MR DIY Group (M) Bhd’s initial public offering (IPO) raised RM1.5 billion, making it the largest in three years and the only listing to surpass the billion-ringgit threshold this year.
The retailer made its debut on Bursa Malaysia’s Main Market on Oct 26, and holds the distinction of being the country’s biggest listing of a retailer to date. The previous IPO of any real size was that of petrochemical group Lotte Chemical Titan, which raised RM3.77 billion in its public share sale in 2017.
Mr DIY’s market capitalisation of RM10 billion upon listing — based on its IPO price of RM1.60 per share — was even bigger than that of a number of better-known companies, including airport operator Malaysia Airports Holdings Bhd (RM9.18 billion) and national postal service provider Pos Malaysia Bhd (RM853.23 million). Its RM10 billion valuation, based on its enlarged share base of 6.28 billion, values the retailer at 31.6 times its earnings per share of 5.06 sen for the financial year ended Dec 31, 2019.
With an estimated market share of 29.1% in 2019 and based on RM2.28 billion in revenue in FY2019, Mr DIY is the largest home improvement retailer in Malaysia.
Some 410.15 million shares were traded upon its listing, or the equivalent of 43.5% of its free float of about 941.49 million shares. The counter closed at RM1.75 on its maiden trading day, up 15 sen or 9.4% from its IPO price of RM1.60. Concerns over its lofty listing valuation and share price aside, it is worth noting that the stock has more than held up, gaining 85% since listing to RM3.02 on Dec 23.
Of the RM1.5 billion raised, RM1.20 billion went to the promoters, who offered their shares for sale. The remainder RM301.44 million is slated to pay off debts worth RM276.14 million, and RM25.3 million in IPO fees and expenses incurred.
Maybank Investment Bank Bhd and CIMB Investment Bank Bhd were the joint advisers, joint global coordinators and joint bookrunners for the institutional offering, as well as joint managing underwriters and joint underwriters for the retail offering. RHB Investment Bank was the joint global coordinator and joint bookrunner for the institutional offering, and joint managing underwriter for the retail offering.
Credit Suisse and JP Morgan were joint global coordinators and joint bookrunners for the institutional offering, while AmInvestment Bank, Hong Leong Investment Bank and Kenanga Investment Bank were joint underwriters for the retail offering.
Mr DIY’s IPO attracted significant foreign institutional investment. Its cornerstone tranche, representing 76% of the global institutional tranche, was dominated by foreign institutional investors that had not participated in Malaysian IPOs in the last six to eight years.
Another notable IPO this year was that of Aco Group Bhd, as it had turned in the best share price performance since listing at 28 sen on the ACE Market on March 18, the start of the Movement Control Order.
Although its share price tumbled to 16 sen at day’s end, it recovered over the months and was up 118% to 33 sen on Dec 23. The electrical products distributor is valued at RM109 million at the current share price.
Aco raised RM23.24 million in its public share sale, and said part of the proceeds would be used to set up new sales outlets and concept stores as well as a new head office and distribution centre in Johor.