ACE Market-bound TSA Group poised to raise RM42.53m from IPO

TSA Group Bhd, a distributor and supplier of ferrous and non-ferrous metal and other industrial hardware products, has unveiled an initial public offering (IPO) entailing 77.32 million shares at 55 sen/share en route to its listing on the ACE Market of Bursa Malaysia.

The 77.32 million new ordinary shares which represent 25% of TSA’s enlarged share base include 15.46 million shares for the Malaysian public; TSA’s eligible employees (15.46 million shares); Bumiputera investors approved by the Investment, Trade and Industry Ministry (MITI) (38.66 million shares); and private placement to selected investors (7.73 million shares).

Based on the issue price of 55 sen/share, TSA will boast a market capitalisation of RM170.115 mil upon listing.

“Our entry into the ACE Market marks a pivotal moment in TSA’s journey as it enhances our industry presence and reputation,” commented the company’s group managing director Chew Kuan Fah at its prospectus launch today.

“The group’s approach to the allocation of the IPO proceeds is driven by a two-pronged strategy, namely strengthening our balance sheet and propelling forward our growth ambitions.”

From the approximately RM42.53 mil raised, 47% of the sum will be strategically used to repay existing borrowings within five months of TSA’s listing.

“This move is a step towards solidifying our financial base, reducing debt and minimising interest costs, thereby enhancing our financial resilience,” justified Chew. “Another 29% of the proceeds raised are allocated towards strengthening our working capital over the next 36 months and in improving operational efficiency.”

Simultaneously, TSA which is also a manufacturer and processor of stainless-steel pipes is investing 12% of the proceeds in the establishment of its Semenyih manufacturing premises which is deemed part of the group’s growth strategies.

“It is slated to commence operations within 24 months post-listing and is a testament to our commitment to scaling our operations and enhancing market reach. The remaining funds will cover the listing expenses,” added Chew.

Established in 1993 and expanding into pipe manufacturing in 2008, TSA has a strong presence in Malaysia and Singapore. To-date, the company has been supplying a wide range of metal products, including stainless steel plates, bars, coils and pipes through directly selling to its vast network of end buyers.

Meanwhile, AmInvestment Bank Bhd is the IPO’s principal adviser, sponsor, underwriter and placement agent. The investment bank is also committed to underwriting 30.93 million ordinary shares for the Malaysian public and TSA’s eligible employees.

The application window for TSA’s public issue opens today and will close on Jan 17, 2024, at 5pm. TSA listing on the ACE Market of Bursa Malaysia is tentatively scheduled for Feb 2, 2024. – Dec 27, 2023

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