BCM Alliance’s proposed special issue remains uncertain


BCM Alliance Bhd’s move to raise its equity owned by Bumiputera shareholders and the emergence of a new substantial shareholder provide its share price support amid the increased interest in healthcare-related stocks due to the fresh wave of Covid-19 infections.

The company has until the end of the year to meet the minimum 12.5% Bumiputera equity holding and in June decided to undertake a special issue of up to 60.2 million new shares, amounting to 14.5% of total equity, to Bumiputera investors selected by Ministry of International Trade and Industry (MITI) at an indicative price of 26.6 sen a share.

To ensure takers for the special issue, an analyst believes BCM Alliance’s share price on the market will have to remain at a premium to the offer price to encourage better take-up of the issue, the timeline for which has been extended till the end of this month due to the Movement Control Order.

“The prospective buyers of BMC Alliance’s shares with MITI will probably want a good premium on the issue price as a reason to buy, but if the market share price is at or below the issue price, the special issue may fall short of its aim,” the analyst said.

He added that the mixed showing by new listings like Aneka Jaringan Holdings Bhd suggests investors have become more careful with their investment as well, despite ample liquidity in the market.

BCM Alliance’s shares closed at 29 sen yesterday, down half-a-sen for the day. Whether the small premium will be enough to attract buyers remains to be seen, taking into consideration the availability of five IPOs this month including the Mr DIY Group (M) Bhd’s listing next week.

BCM Alliance’s share price has risen by some 23 sen or 354% since closing at 6.5 sen on March 19, 2020.

It gained some RM100 million in market capitalisation during the period and is now valued at RM124 million.

Recent filings with Bursa Malaysia showed there have been frequent changes to the stakes of sub-stantial shareholders and directors since March.

In March alone, substantial shareholders and directors like Hew Chun Shun acquired 153,000 shares, while Liaw Chong Lin bought 500,000 shares, Koh Lap Hing purchased 694,000 shares and Chung Eng Lam acquired 250,000 shares.

Koh then disposed of 694,000 shares on March 31, 2020, while Chung sold 300,000 shares. Liaw disposed of 500,00 shares on May 21, 2020, and Hew sold 500,000 shares on June 4, 2020, the company’s past exchange filings revealed.

Milux Corp Bhd former group MD Koh Pee Seng emerged as a substantial shareholder in BCM Alliance after buying an additional 6.76 million shares in August to take his total shareholding in BCM Alliance to 27.08 million shares or a 6.43% stake.

Rakuten Trade Sdn Bhd VP of research Vincent Lau said BCM Alliance’s special issue may benefit from increased investors interest in healthcare-related counters.

“BCM Alliance is in the healthcare business which is benefitting from the pandemic, hence the picking up in investors’ interests now. It might be easier for the company to fulfil the requirements for the Bumiputera investors now,” he told The Malaysian Reserve recently.

BCM Alliance is expected to raise a gross proceeds of up to RM16 million from the successful issue. The company aims to utilise the proceeds for purchase of new devices and equipment (RM9.75 million), working capital (RM5.4 million) and estimated expenses for the proposed special issue (RM200,000).

BCM Alliance noted in its June filing that the board is of the opinion the proposed special issue is the most appropriate method for the company to meet the Bumiputera equity requirements after taking into consideration that the equity issuance will enable the company to raise new funds for its business without having to incur additional financing costs associated with traditional borrowings, and at the same time strengthen the company’s financial position with enhanced shareholders’ funds.

Last month, Bursa Malaysia resolved to approve the listing and quotation of up to 60.2 million new shares in BCM Alliance to be issued pursuant to the proposed special issue.