Malaysia’s 99 Speed Mart Launches Biggest IPO

Malaysia’s convenience store chain operator ‘99 Speed Mart Retail Holdings Bhd’ on Thursday launched Malaysia’s biggest initial public offering (IPO) in seven years, which would raise up to $715 million for its Main Market listing. The listing is scheduled for September 9.

The IPO is priced at $0.37 per share, according to the official prospectus, which was released on Wednesday. The company has begun taking orders from both retail and institutional investors and the retail offering will close on August 23 while the institutional tranche will end on August 27.

Founded in 1987 as a single sundry store in the state of Selangor, 99 Speed Mart operates more than 2,600 stores in Malaysia selling everything from toilet papers to eggs, and plans to increase the number of outlets to 3,000 by the end of 2025.

The IPO is backed by 14 of the cornerstone investors, including fund managers AHAM Asset Management Bhd and Areca Capital, insurers AIA and Great Eastern Life Assurance, as well as state investment companies Employees Provident Fund and Social Security Organisation.

Cornerstone investors — typically large institutional investors — commit to taking up a big chunk of IPO shares before they are marketed to other retail and institutional investors. Their presence helps to build up other investors’ confidence for the shares during an IPO.

99 Speed Mart’s IPO involves an offer for sale of 1.03 billion existing shares and a public issue of 400 million new shares. The institutional tranche comprises 1.22 billion shares through book-building, while 210 million shares have been allocated to retail investors.

The cornerstone investors have together agreed to take up 786 million shares, more than half of the IPO shares, and each will hold less than 5% stake in the company.

Funds for Expansion

The public issue would raise up to $148 million, and the company has earmarked nearly 59% of the proceeds for expansion of its network of outlets. The company will also spend 15% on setting up new distribution centres, 8.3% for purchase of delivery trucks, and 7.2% to upgrade existing outlets.

The company will also use 6.8% or a little over $10 million of the IPO proceeds for repayment of existing bank borrowings totalling around $11 million. The rest will go towards defraying listing expenses.

The offer for sale meanwhile would gross about $380 million, which would accrue entirely to the selling shareholders Lee Thiam Wah, who is also the chief executive officer of 99 Speed Mart, and his wife Ng Lee Tieng.

CIMB Investment Bank is the IPO’s principal adviser, sole book-runner, sole managing underwriter and joint underwriter. Affin Hwang Investment Bank and RHB Investment Bank are joint underwriters.

IPOs in 2024

According to Bloomberg, this year’s IPOs have included palm oil producer Johor Plantations Group, which at $156 million was the largest debut in the country since 2022, and Alpha IVF Group’s $98 million listing.

Others on tap include South Korea-based OCI Holdings, which is considering listing its Malaysian polysilicon unit on the Kuala Lumpur stock exchange to raise as much as $320 million, Bloomberg added.