KUALA LUMPUR: Integrated health supplement manufacturer and distributor, Bioalpha Holdings Bhd, which debuted on Bursa Malaysia’s ACE Market yesterday, is setting aside RM3 million from the proceeds of its initial public offering (IPO) to enhance its research and development (R&D) to maintain a sustainable growth and market expansion of its business.

“We have allocated part of the funds raised from the listing today (yesterday) to upgrade our laboratory facility and develop our proprietary fermentation process for four new medicinal mushroom strains. Besides that, we aim to develop new product formulations,” managing director and chief executive officer William Hon Tian Kok told reporters during the listing ceremony yesterday.

The stock opened at 30 sen per share and surged to an intra-day high of 33 sen, up 65% from its offer price of 20 sen. It eventually pared gains to close at 27 sen, still up seven sen or 35%, giving it a market capitalisation of RM125.1 million.

According to Bloomberg, Bioalpha is currently trading at 15.25 times its price-earnings ratio (PER), higher than the initial PER of 11.25 times.

It was also the most active stock on the exchange yesterday, with over 131.9 million shares traded.

Hon said Bioalpha’s public issue of 100 million new ordinary shares was oversubscribed by 32.19 times.

“Today (yesterday) marks a new phase in our corporate journey by officially becoming a listed entity. The board of directors and management are extremely grateful to all those whose dedicated efforts ensured the listing process was a success,” said Bioalpha chairman Tan Sri Abdul Rahman Mamat.

The group is expected to raise RM20 million in gross proceeds from its IPO, of which RM3 million, as mentioned, will be used for R&D and another RM3 million will be spent on capital expenditure (capex).

According to Hon, the RM3 million capex is to set up a herb processing plant in Pasir Raja, Terengganu.

Besides the two areas, Bioalpha is going to spend some RM9.08 million of the proceeds on working capital, RM2.62 million to repay bank borrowings, and the remaining RM2.3 million to cover listing expenses.

Bioalpha manufactures and sells semi-finished and finished health supplement products as an original design manufacturer. It also manufactures and sells these products under its own house brands.

Its health supplement products comprise processed herbs, formulated ingredients, functional foods as well as herbal and non-herbal supplements.

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This article first appeared in The Edge Financial Daily, on April 15, 2015.