Food
Save for the first initial public offering (IPO) this year on the Malaysian market, corporate debuts on Bursa Malaysia has seen dampened openings thus far. Convenience retail chain store operator Bison Consolidated Bhd listed on the Main Market of Bursa Malaysia on Tuesday, opening at MYR1.09 on a volume of 2.2 million shares, a small discount to its IPO price of MYR1.10. This was despite encouraging reception prior, where the 15.5 million new public shares offered had been 6.94 times oversubscribed. The counter closed its first trading day positively, however, at MYR1.17, marking a 6.36 per cent premium to the opening price. 68,480,900 shares traded hands.
Bison is the third Malaysian IPO in 2016, and the last for this first quarter period. The first two had been building materials supplier Chin Hin Group Bhd earlier this month, and Ranhill Holdings Bhd mid-March. Bison is an investment holding company, and through its subsidiaries, it is involved in the business of press and convenience retailing under its main trade name of “myNEWS.com”.
It also operates eight outlets of WHSmith, under its equal joint venture with UK retailer WHSmith Travel. Managing director Dang Tai Luk told reporters after the listing ceremony that the group intends to open another 115 stores with the IPO proceeds over the next 36 months. It has already opened 20 stores, with another 50 targeted to be opened within 2016. “Our target for 2016 is achievable; we have already identified 30 locations, and are considering another 30 locations. From those numbers, I would say we are targeting to open 70 stores a year,” he said, adding that a key criteria is the population density in the selected locations. Bison seeks to build its network of stores in high-street locations, departing from its old strategy of setting up in commercial buildings and various types of shopping malls.
Its IPO prospectus noted that the group has 255 outlets, as at February 10, which carry a range of print media, convenience retail products and offer consumer services like electronic payment services and money remittance services. According to Smith Zander International Sdn Bhd, Bison owns an estimated market share of 8.6 per cent in outlet numbers, and 6.6 per cent in terms of revenue for the year 2015. The company is also looking to establish another distribution centre either in the north or south of Peninsular Malaysia, looking at either Penang or Johor states.
It currently has one 125,000-sq ft warehouse facility in central Peninsular, and Dang noted that the new warehouse will not be bigger than the existing one. “We have always managed our own distribution, and we want to improve and make it more efficient,” he said.
The management has no plans to expand beyond Malaysia at the moment, as it believes there are more opportunities to tap onto in the domestic market. Bison raised MYR88.68 million ($22.19 million) from the IPO, of which MYR35.55 million or 40.1 per cent will be utilised for the purpose of outlet expansion and enhancing the group’s existing outlets; and MYR14.45 million or 16.3 per cent will be used to improve its nationwide logistics and IT capabilities to support its growing network and product base, the establishment of an additional distribution centre, food preparation and packaging facility and acquiring additional transport equipment. Another MYR32.23 million or 36.3 per cent will be utilised to finance inventory stocking for new and existing outlets as well as other working capital requirements. The proceeds will be utilised for these purposes over the next 36 months. The remaining portion will fund listing expenses.
CIMB Investment Bank was the principal adviser, managing underwriter and sole bookrunner for the IPO.
