Mydin says no IPO plans

MD says it will not suit Mydin’s business strategy in the current retail environment


Mydin Mohamed Holdings Bhd is not considering raising capital from a public listing as it will not suit Mydin’s business strategy in the current retail environment, according to MD Datuk Dr Ameer Ali Mydin.

“It seems like the retail business is in a euphoria state to raise an IPO (initial public offering), but I think the capital raising exercise is not suitable for us at the moment.

“I think it is not the right time for retail businesses to do an IPO as we (the sector) are in the consolidating mode and it will certainly not be ‘value for money’ for us,” he told The Malaysian Reserve (TMR).

Ameer Ali said Mydin (picture) believes in long-term strategies in seeking funds for capital expenditure (capex), which could be more sustainable than an IPO.

“Companies who are seeking for IPOs generally have sold some of their stakes to venture capitalists, who came for the three to five years’ investments.

“Mydin is going for the long stay as we have been in the business for more than 60 years, and we are looking to stick around,” he stressed.

Retailers have begun expressing interest to raise funds via IPOs, with some sizeable issuance involving billions of ringgit.

Bloomberg reported that MR DIY Trading Sdn Bhd — Malaysia’s biggest home improvement retailer — is exploring an IPO that could raise about RM2.1 billion.

The firm is currently interviewing potential underwriters as it considers a listing in Kuala Lumpur, with a market capitalisation target of about RM10 billion.

Kim Hin Joo (M) Bhd, the operator for the Mothercare and ELC brands in Malaysia, has submitted a draft prospectus to the Securities Commission Malaysia for a listing on the ACE Market of Bursa Malaysia.

In the draft, Kim Hin Joo stated the proposed IPO involves a public issue of 76 million new shares or 20% of the group’s enlarged share capital, and the sale of 57 million existing shares or 15% of its enlarged share capital.

The Pelita Group of Cos also plans to launch an IPO on the ACE Market next year to fund their business expansion and capex.

Some 30% of the company’s stock is expected to be placed in the market.

Rampai-Niaga Sdn Bhd, who operates The Body Shop stores in Malaysia, is reported to be considering an IPO to raise RM200 million.

Affin Hwang Investment Bank Bhd head of equity capital markets Arvin Chia said it would be tough to predict the performance of upcoming IPOs, due to a volatile global market.

“IPOs’ performance has always been subjected to the global market and it is volatile at the moment. However, there is never a perfect time for IPOs as it will eventually boil down to the individual companies.

“In general, your business should be on a good path, otherwise it is quite hard to convince the investors to invest money in the company that is not growing,” he told TMR.

On the recent spike in IPO interest, Chia said there is a sign of recovery in investors’ appetite for consumer-based stocks.

“There are a lot of companies who are interested in raising IPOs. Basically, we can only hope for the market to stabilise before they are launched.

“In the past, investors were interested to invest in public offerings even during a volatile market, and I think it will likely to happen in 2019.

“Consumer-related stocks have attracted strong demand and interest from investors,” he said.