KUALA LUMPUR (Oct 26): Leform Bhd is seeking to raise RM71.5 million via an initial public offering (IPO) exercise on the ACE Market of Bursa Malaysia, with the bulk or some 42% of the proceeds to be used to construct its new headquarters, warehouse storage facility and workers’ accommodation.

Apart from the expansion expenses, another RM21.91 million or 30.6% of the proceeds are earmarked for working capital purposes to purchase raw materials to support its growing business activities, while RM14.39 million or 20.1% will be used for repayment of bank borrowings. The balance RM5.2 million or 7.3% is for estimated listing expenses.

Leform is scheduled to be listed on Nov 22. The company and its subsidiaries are principally involved in the manufacturing of and trading in steel pipes, guardrails and flat steel products such as slitted steel coils and sheets.

Based in Serendah, Selangor, the group has integrated operations in producing steel pipes, from the production of materials to the delivery of finished products.

In a statement following its prospectus launch on Wednesday (Oct 26), Leform managing director Law Kok Thye said the IPO proceeds are anticipated to accelerate the group’s growth trajectory.

“The proposed new facility will be a one-stop centre that would allow for higher operational efficiency. In addition, our storage capacity will increase by 93.2%, allowing us to cater for the anticipated increase in production volume and widen our product range.

“With the launch of our prospectus, Leform is now one step closer to being a publicly listed company. We believe this is an opportune time to be listed.

“Amidst the challenges to our group as a result of the recent fall of global steel prices, we are still upbeat on the outlook of our business moving ahead with the expected rising steel consumption on the back of recovery in manufacturing and construction industries,” he said.

Leform executive director and group adviser Robert Phang Yew Cheong, who was present at a press conference after the prospectus launch, said the group is expected to see its market share gradually improve over the next few years riding on the back of its plans to expand its existing facility. 

“Currently, because of the lack of space that we have, we are constrained. Even if we want to produce more, we cannot. We are capable of producing but we can't because of all the lack of space that we have. But once this is free, yes, we are encouraged to grow,” Phang told reporters.

Additionally, Leform shall endeavour to maintain a dividend payout ratio of not less than 20% of its annual audited net earnings.

Following the prospectus launch, applications for the public issue are open from Oct 26 and will close on Nov 11 at 5pm.

Leform’s IPO entails a public issue of 311 million new ordinary shares, representing approximately 21% of the enlarged share capital, along with an offer for sale of 74.1 million existing shares, representing 5% of the enlarged share capital.

Of the 311 million new public issue shares, 74.1 million new shares are available for the Malaysian public, 29.6 million shares are available for eligible directors and employees of the group and persons who have contributed to the success of the group.

Another 22.2 million new shares are available by way of private placement to identified institutional and/or selected investors and 185.1 million new shares are available by way of private placement to identified Bumiputera investors approved by the Ministry of International Trade and Industry.

Some 74.1 million existing shares will also be offered for sale by way of private placement to identified institutional and/or selected investors.

MIDF Amanah Investment Bank Bhd is the principal adviser, sponsor, sole underwriter and sole placement agent for Leform’s IPO exercise.