(Updated)

Top Glove downsizes Hong Kong IPO to raise RM4.17 billion instead of RM7.7 billion

Top Glove downsizes Hong Kong IPO to raise RM4.17 billion instead of RM7.7 billion
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KUALA LUMPUR (April 22): Top Glove Corp Bhd has downsized its Hong Kong initial public offering (IPO) to raise RM4.17 billion, down from the RM7.7 billion initially.

In a bourse filing, Top Glove explained that the decision on raising less money in Hong Kong came after the glove maker took into account "the best interest of the existing shareholders of the company by minimising dilution to existing shareholders' respective shareholding".

Consequently, cash-rich Top Glove said it will issue 793.5 million shares, from 1.495 billion shares initially stated.

The group said as far as the revised earnings per share impact from listing is concerned, there will be a proportional dilution as a result of the exercise.

It noted that based on the 793.5 million shares to be issued as part of the dual primary listing, this issuance represents 9.02% of its enlarged share capital once the listing is completed.

The decision to downsize its IPO comes roughly two months after the glove maker unveiled its plan to seek primary dual-listing in Hong Kong Stock Exchange (HKEx). The IPO plan, which will result in earnings and shareholding dilution, has been met with criticism as Top Glove does not appear to be short of capital given its swelling cash pile thanks to the superprofit it has earned during the pandemic. 

Top Glove's share price has been on a decline since October last year, falling from an all-time high of RM8.93 to a low of RM4.52 on March 31 — evaporating some RM36 billion of market capitalisation.

The stock closed at RM5.62 today, valuing it at RM46.12 billion

Now that the number of shares it will issue has been reduced, its share capital will increase to nine billion shares, instead of 9.7 billion shares when the move was first announced.

Top Glove said in the latest filing that it will have RM2.49 billion for the expansion of production capacity and developing a data-driven manufacturing system, RM0.42 billion for research and development (R&D), RM0.42 billion for software upgrades, RM0.21 billion for environmental, social and governance (ESG) initiatives, RM0.42 billion for potential mergers and acquisitions (M&As) and RM0.21 billion for working capital requirements.

This is in contrast to the RM4.61 billion initially earmarked for the expansion of production capacity and developing a data-driven manufacturing system, RM770 million for R&D, software system upgrades, and potential M&As.

Meanwhile, Top Glove initially planned to spend RM390 million on ESG practices and initiatives, while the remaining RM390 million would have been used for working capital and general corporate purposes.

In March, the rubber glove company announced that its primary dual-listing in Hong Kong would happen by May or June.

On Feb 26, the group announced that it had filed an application with the stock exchange in Hong Kong for the primary dual-listing.

The move was first announced by executive chairman Tan Sri Dr Lim Wee Chai last September, who said the listing was a means to diversify its investor base.

Upon listing in Hong Kong, Top Glove will maintain its primary listing on the Main Market of Bursa Malaysia and existing secondary listing on the Main Board of Singapore Exchange Securities Trading Ltd (SGX-ST).

Once the proposed dual primary listing is executed, Top Glove shares will be listed and traded on Bursa, SGX-ST and HKEx and all such shares will be fungible/transferable among these three stock exchanges.

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Kathy Fong