PETALING JAYA: Mr DIY Group (M) Bhd, en route to a listing on Bursa Malaysia’s Main Market on Oct 26, will raise RM1.5 billion in Malaysia’s largest initial public offering (IPO) of the year at an initial retail price of RM1.60 per IPO share.
The IPO, of up to 941.49 million Mr DIY shares, represents 15% of the enlarged issued 6.28 billion shares, and comprises of an offer for sale of up to 753.09 million existing shares and a public issue of 188.4 million new shares.
The IPO will raise RM301.4 million from the public issue, of which RM276.1 million will be for the repayment of bank borrowings. The remaining RM25.3 million will be to defray the estimated listing expenses. The repayment of the borrowings will give rise to with an interest savings of RM15.2 million a year.
The 941.49 million shares comprises a retail offering of 161.53 million shares, an institutional offering of up to 779.96 million shares, and the remaining 309.21 million shares will be to Malaysian institutional and selected investors, foreign institutional/selected investors outside the US and qualified institutional buyers in the US.
The largest home improvement retailer in Malaysia has secured some of the world’s notable investors, including Aberdeen Standard, AIA, BlackRock, FIL Investment Management, JPMorgan Asset Management and Pictet Asset Management.
The cornerstone investors make up 76% of the institutional offering tranche, excluding shares offered to bumiputra investors. Some of Malaysia’s largest funds such as Affin Hwang, AIA, Aberdeen, Eastspring, Hong Leong Assurance and Hong Leong Asset Management have also joined in supporting Mr DIY’s IPO.
Mr DIY, founded in 2005, plans to open 307 new stores across all its brands in 2020 and 2021, expanding its portfolio by 52% from 593 stores as at Dec 31, 2019. It has opened 70 stores thus far this year and expects to open an additional 30 by year-end.
Mr DIY executive director and CEO Adrian Ong Chu Jin said the capital expenditure (capex) for a Mr DIY store is about RM1.6 million, while the capex for toy store Mr Toy and household products store Mr Dollar is RM1 million and RM1.2 million, respectively.
He added that the Malaysian home improvement market is expected to be worth RM12.5 billion by 2024, growing at a compounded annual growth rate from 2019 to 2024 of 10.2%. Mr DIY is a market leader with an estimated 29.1% market share in the country in 2019, according to Frost & Sullivan.
“We built this business with a long term outlook. We’re adding stores at a fast pace. We’re confident in the long term nature of our business,“ Ong told a virtual press conference after its prospectus launch yesterday.
Mr DIY group posted an aggregate revenue of RM465.6 million for the two months of May and June 2020 in the post-movement control order period, 12% higher than RM416.1 million recorded in the two months of January and February 2020. For the period ended June 30, 2020, e-commerce make up 1.6% of its sales revenue, compared with 0.3% in FY19.
Ong added that Mr DIY has adopted a dividend policy that targets to return 40% of its earnings to shareholders.
Upon listing, Mr DIY is expected to have a market capitalisation of RM10 billion.
