Instant beverage premix manufacturer Orgabio Holdings Bhd expects to raise RM29.97 million under its listing on the ACE Market of Bursa Malaysia for business expansion.
The Company plans to use RM16.0 million (53.4%) raised from the initial public offering (“IPO”) to part-finance the construction of its new factory in Semenyih, as it expands its manufacturing capacity to cater to its future business growth.
Dato’ Ean Yong Tin Sin, Executive Deputy Chairman of Orgabio said, the increased capacity will enable the Company to take on new customers and more large orders arising from its plans to grow the customer base in the direct selling segment, expand export sales, and expanding the range of product offerings and market presence of its house brands.
“We plan to grow our customer base in the direct selling segment by securing more local and overseas direct selling companies as our customers as direct selling companies can provide us with high manufacturing volumes, which will, in turn, enhance the growth of our financial performance and the sustainability of our Group.
“By engaging our instant beverage premix manufacturing services, these direct selling companies can leverage our experience and insights on various blends, taste profiles, and preferences which are specific to their target markets to launch new products under their brands.
“In the past four financial years ended 30 June 2018, 2019, 2020 and 2021, our sales to direct selling companies contributed between 61.4% and 80.6% to our Group’s revenue. As at 17 May 2022, we have nine local direct selling companies as our customers,” he added.
Orgabio will further utilise RM8.14 million (27.2%) of the proceeds for working capital requirements mainly to purchase supplies such as milk powder, creamer, colostrum powder, coffee powder, sugar, and sachet foils used for the manufacturing of its products; RM2.23 million (7.4%) to purchase new machinery to support and enhance the efficiency of its existing manufacturing activities while the remaining RM3.60 million (12.0%) for estimated listing expenses.
Commenting on the fluctuation in raw material prices, Dato’ Ean Yong said, Orgabio has begun to pass on the increase in the cost of supplies to its customers by increasing the selling price progressively in order to improve the Company’s gross profit margins and have factored in the increase of raw material prices when issuing quotations to new customers.
“We provide our customers with three months’ advanced notice on the changes in prices and upon agreement, new purchase orders with the adjusted pricing will be issued for future orders,” he further added.
Under the listing exercise, Orgabio is issuing 96.7 million new shares in Orgabio representing 39.0% of the enlarged share capital at an issue price of RM0.31 per share.
Of the 96.7 million new shares, 12.4 million new shares (5.0%) will be made available to the Malaysian public via balloting; 6.2 million new shares (2.5%) for its eligible Page 3 of 5 Directors and employees as well as persons who have contributed to the success of Orgabio Group under Pink Form Allocations while the remaining 78.1 million new shares (31.5%) are earmarked for private placement to selected Bumiputera investors approved by the Ministry of International Trade and Industry and selected investors including its cornerstone investor
The IPO has attracted and secured traditional healthcare group Hai-O Enterprise Berhad (a wholly-owned subsidiary of Main Market-listed BesHom Holdings Bhd as its cornerstone investor.
Based on the enlarged share capital of 247.9 million shares, Orgabio is expected to have a market capitalisation of RM76.8 million.
The IPO is open for subscription from today to 21 June 2022. A copy of the prospectus relating to this offering may be obtained from Bursa Securities’ website
Orgabio is scheduled to be listed on the ACE Market of Bursa Securities on 5 July 2022.
