Eco-Shop confident ahead of main market debut with RM420mil IPO
PETALING JAYA: Eco-Shop Marketing Bhd, which is en route to a listing on the Main Market of Bursa Malaysia Securities Bhd, remains confident in its prospects as underpinned by strong fundamentals despite uncertainties in market sentiment and the economy.
Eco-Shop said its initial public offering (IPO) is set to be the largest IPO to be launched in the past eight months, with an estimated RM419.87 million to be raised through the public issuance of 347 million new shares, based on the IPO retail price of RM1.21 per share.
The company will also offer 675.37 million shares to institutional investors at a price to be determined through a book-building process, it said in a statement.
The IPO has secured ten investors acting as cornerstone investors, who collectively subscribed for 90.91 million shares or 90.31 per cent of the institutional offering, the firm said.
Its chief executive officer and executive director Jessica Ng said that global market uncertainties have undoubtedly impacted both investor and consumer sentiment.
However, she said Eco-Shop remains optimistic that its value proposition is timely and well-suited to the current environment.
"Market forces are definitely one of the factors that we take into consideration (for listing).
"However, in this tough situation (with market uncertainties), a business model like ours is even more needed. (Looking at the US tariffs) and the rising cost, we are very ultra-affordable," she told reporters during the press conference today, in conjunction with the launch of the IPO prospectus.
She said Eco-Shop has consistently proven its business strength over the years, with strong sourcing capabilities and a competitive edge in bulk purchasing.
"We also have solid operations and infrastructure, and the ability to buy in volume and repackage products into smaller sizes," she added.
Eco-Shop's listing on the Main Market is set for May 23, 2025.
In response to a question about the product price hike, Ng explained that the rise from RM2.40 to RM2.60 (starting April 14) was due to the increase in the minimum wage, but she emphasised that most of its workers fall within the B40 income group.
"The majority of EcoShop employees are under the B40 group. So, we will have to make this adjustment to help our employees as well.
"While the basic pay is RM1,700, Eco-Shop pays a basic wage of RM1,800. So, the decision was made as we have to balance between taking care of the stakeholders in the right way," she said.
Meanwhile, commenting on the IPO proceeds utilisation, Ng said Eco-Shop has allocated RM56.27 million (13.4 per cent) to accelerate the expansion of its retail footprint nationwide and RM200 million (47.6 per cent) to expand its distribution centres.
She added that RM10.90 million (2.6 per cent) is earmarked for investment in information technology hardware and software, RM100 million (23.8 per cent) towards repaying bank borrowings, and RM52.70 million (12.6 per cent) for working capital purposes and defraying the costs of the IPO and listing.
"We are targeting 70 stores per year for the next five years, and currently, the under-penetrated market will be the Klang Valley as well as East Malaysia.
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