Eco-Shop launches the year's biggest IPO to date
PETALING JAYA: Main Market-bound Eco-Shop Marketing Bhd aims to raise RM419.87mil via an initial public offering (IPO), which comprises 347 million new shares at a retail price of RM1.21 apiece.
Slated to debut on the Main Market of Bursa Malaysia on May 23, 2025, Eco-Shop is estimated to have a market capitalisation of RM7bil upon listing, making it Malaysia's biggest IPO for this year as of now.
Operating as a dollar chain store, Eco-Shop currently has about 350 stores nationwide and is planning to expand by opening up another 70 stores within one year after listing.
Executive director and chief executive officer Jessica Ng said there are ample opportunities and space to increase the number of outlets in Malaysia.
Despite not disclosing the specific locations for the planned outlets, she said the majority will be in underserved areas in the Klang Valley and states on the east coast.
'In the last 12 months, we focused a lot on Johor to maximise operational efficiency.
'But this year, we would like to open more stores in the Klang Valley.
'So, we hope we can make our presence more visible in the sector,' she explained during a press conference after the launch of Eco-Shop's prospectus here yesterday.
That being said, the group has allocated about 13.4% of the proceeds or RM56.27mil for the expansion of new chain stores.
When asked about the duration to reach breakeven per store, Ng said it would usually take about one year for each store to be profitable.
She stated that the group is looking to enhance its warehouse and distribution capabilities by developing a new semi-automated distribution centre in Klang, Selangor.
Eco-Shop will be acquiring a 307,560 sq- m-freehold medium industrial land for the construction of the distribution centre, with the deal to be financed via IPO proceeds amounting to RM200mil.
'This is in line with the growth in the number of our outlets,' Ng said.
An allocation of RM10.9mil or 2.6% of the proceeds has been put aside as the group also plans to invest in IT hardware and software to further enhance and support daily operations.
The remainder of the proceeds will be used to finance the repayment of bank borrowings, working capital and listing expenses at RM100mil, RM24.7mil and RM28mil, respectively.
On that note, Ng stated that the group remains confident in its future prospects despite the current uncertainties within the global economic landscape.
'The consumer sentiment is definitely shifting and people are more budget-conscious as well. So, Eco-Shop is a brand that really fits into this good value proposition,' she said.
On the trade war between the United States and China, she views it to be more advantageous for the group considering the opportunities presented from China's exports. About half of its products are imported and the remaining half are supplied locally.
Additionally, Ng shared that the group will be expanding its house brands by improving product display and revamping packaging and products as well as product innovation.
'Our house brand represents 70% of our stock keeping units and reflects close to 56% of our sales participation.
'Hence, our house brand plays a very critical role,' she explained, adding that house brands bring in higher margins.
Eco-Shop has 29 house brands as of today.
On top of its public offering, Eco-Shop will offer 675.37 million shares to institutional investors at a price to be determined through a book-building process – of which 10 investors were identified as cornerstone investors who collectively subscribed for 90.91 million shares or 90.31% of the institutional offering.
The cornerstone investors include Aham Asset Management, Albizia Capital Pte Ltd, Areca Capital Sdn Bhd, Eastspring Investments Bhd, Kairous Equity Sdn Bhd, Kenanga Investors Bhd, Kenanga Islamic Investors Bhd, Lion Global Investors Ltd, RHB Asset Management Sdn Bhd and RHB Islamic International Asset Management Bhd.
An offer for sale of up to 515.15 million existing shares was also made available.
Applications for the IPO are now open and will close on May 7, 2025 at 5pm.
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