This article first appeared in The Edge Financial Daily on October 24, 2018

KUALA LUMPUR: Securemetric Bhd, en route to a listing on ACE Market of Bursa Malaysia on Nov 13, 2018, is seeking to raise as much as RM17 million from its initial public offering (IPO).

Its chief executive officer (CEO) Law Seeh Key said 33.5% of the expected proceeds, or RM5.7 million, will be used to develop new digital security solutions over the next 24 months.

Another RM5.16 million (30.4%) will be for working capital, he said.

“A further RM1.9 million (11.4%) will be to repay borrowings, RM1.7 million (10%) for business expansion and RM2.5 million (14.7%) to defray an estimated listing expenses,” he told reporters at the launch of the company’s prospectus yesterday.

The company, founded in 2007, is mainly involved in providing digital security solutions as well as trading of electronic identification products and other related services.

On the development of new digital security solutions front, Law said the company will introduce a Cloud-based security service.

“From the total IPO proceeds, about RM5.7 million will be used for research and development, mainly to productise some of the existing solutions — we have the intention to introduce security as a service based on the cloud model,” Law said.

On the business expansion, Law said the company will continue to focus on its existing markets over the next two years.

He said the existing markets still have high business growth potentials for the company and that Securemetric intends to further grow its business presence and customer base.

“Currently, the countries that we have the presence have high-growth potentials, thanks to their governments aggressively pushing the digital economy transformation, and these are well-supported by the need to further improve their e-government services,” Law added.

He said the group is well-positioned to benefit from growing emphasis by corporates and governments on having robust digital security solutions to safeguard data, information and assets.

“The potential market size for the digital security solutions in Southeast Asia is huge, which expected to exceed eight billion by 2020,” Law added.

Law said the company has deployed the localised strategy and this has given the company the advantage to compete in the markets over the years.

Securemetric and its units currently offer digital security products and solutions across Southeast Asia, namely in Malaysia, Vietnam, the Philippines, Indonesia and Singapore.

Their clients include government organisations, financial institutions, public certification authorities, software development companies and information technology service providers.

Securemetric said the IPO exercise entails the issuance of up to 68 million new shares, comprising a public issue of 17 million shares, while 48 million will be placed out to identified investors, and the remaining three million will be for eligible company employees at 25 sen apiece.

With the IPO price of 25 sen apiece, Securemetric is expected to debut on the ACE Market with a market capitalisation of RM60.9 million.

Pre-IPO, Law is the biggest shareholder in Securemetric with 71.95% stake. Chief operating officer Nioo Yu Siong owns 12.86%, while chief financial officer Yong Kim Fui holds 8.35%. The remaining 6.84% is owned by Li JianJun.

Post-listing, Law’s stake will fall to 51.87% while Nioo, Yong and Li will see their stakes reduced to 9.27%, 6.02% and 4.93% respectively.