Daythree Digital Berhad Expects To Raise RM33.12 Million In Listing Exercise (Updated)

Tech-driven Global Business Services (GBS) service provider Daythree Digital Berhad (“Daythree Digital” or the “Company”) expects to raise RM33.12 million under its listing exercise on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The company plans to use RM14.70 million (44.4%) raised from the initial public offering (“IPO”) for working capital requirements to recruit additional 380 customer experience (“CX”) executives to enhance its capacity to service growing number of contracts. In tandem with the expansion, it will enter into a lease contract for rental of 380 units of computer equipment per CX executive.

A further RM7.10 million (21.4%) of the proceeds will be used to part finance the additional working space required for its growing customer base and the expansion of its headquarters to cater for the rising number of employees as well as to set up a multipurpose facility for internal training and meetings.

The remainder of the proceeds will be used for capital expenditure in networking infrastructure, hardware and software amounting to RM3.00 million (9.1%); RM3.02 million (9.1%) to recruit industry experts to capture growth opportunities in the local GBS industry; RM1.50 million (4.5%) for branding, marketing and promotional activities while the remaining RM3.80 million (11.5%) to defray the estimated listing expenses.

Daythree Digital Managing Director Raymond Davadass said the company expects its working capital requirements to increase in tandem with the expected growth in scale of its operations.

“People cost is a significant component in our business and as such, we have allocated 44.4% of the proceeds earmarked for working capital requirements for our upcoming projects and/or contracts.

“The allocation of proceeds raised from the Public Issue for our working capital requirements will allow us to undertake more contracts concurrently. This is because the number and size of contracts that we can undertake at any point in time depend largely on the availability of our working capital. By allocating a portion of our proceeds to satisfy various working capital requirements associated with number of staff allocated to respective project, our Group will be in a better position to tender and expand our portfolio,” he added.

Malaysia Digital Economy Corporation CEO Mahadhir Aziz said Daythree Digital is a member of MDEC’s GAIN (Gateway,  Amplification, Invest, Nurture) programme that is designed to  catalyse the expansion of Malaysian tech companies to soar on the global stage.

“The GAIN programme, of which Daythree is a member, is among the many growth-spurring initiatives that we have  facilitated. Launched in 2015 to provide strategic interventions  for local tech companies to skyrocket on the global stage, the  GAIN programme is grounded on 4 main pillars – Gateway, Amplify, Invest & Nurture,” he said. 

According to Mahadhir, the GAIN network today comprises over 200 ecosystem  partners in 15 countries. Since its inception, the GAIN program  has initiated over 800 business matching opportunities for their  portfolio companies. All of this has resulted in approximately  US$1.75 billion in digital export revenue by Malaysian based  companies. 

He believes regional digital transformation is happening at a breath-taking  pace, quoting Google’s e-Conomy SEA report, which states that Southeast Asia’s internet economy is on track to hit US$200 billion in 2022,  representing a 20% year-on-year growth, 3 years earlier than  expected. 

The report estimates Malaysia’s Digital Economy will touch US$35 billion in 2025. MDEC expects this growth will create  a fertile ground for digital services to prosper. 

Malaysia has been ranked as the world’s third most competitive  Global Business Services (GBS) location, behind India and  China, according to Kearney’s most recent 2021 Global  Services Location Index. 

It is estimated that there are more than  600 GBS firms in Malaysia, with more than 250,000 staff  employed. The Malaysian GBS industry is projected to maintain  its growth trajectory and is expected to grow from RM24.79 billion in  2023 to reach RM31.74 billion in 2027. 

Key drivers of this growth are cross-functional optimisation and intelligent automation, leading to higher productivity and lower costs. Under the listing exercise, Daythree Digital is issuing 110.40 million new shares in Daythree Digital, representing 23.0% of the enlarged share capital at an issue price of RM0.30 per share.

Of the 110.40 million new shares, 24.00 million new shares will be made available to the Malaysian public via balloting; 12.00 million new shares for its eligible Directors and employees of Daythree Digital Group under Pink Form Allocations, while the remaining 74.40 million new shares are earmarked for Private Placement to selected investors.

As part of its listing exercise, the existing shareholders of the Company will also make an Offer for Sale of 12.00 million existing shares to selected investors by way of Private Placement. Based on the enlarged share capital of 480.00 million shares, Daythree Digital is expected to have a market capitalisation of RM144.00 million after listing.

The IPO is open for subscription from today until 11 July 2023. A copy of the prospectus relating to this offering may be obtained from Bursa Securities’ website (www.bursamalaysia.com).

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