KUALA LUMPUR (May 28): Johor-based pawnbroker Well Chip Group Bhd said on Tuesday Kenanga Investment Bank and CGS International have agreed to underwrite its initial public offering (IPO) on the Main Market of Bursa Malaysia.

The agreement marks another step forward for the company’s IPO since it filed a draft prospectus on Dec 21, 2023 to the Securities Commission Malaysia. The company is expected to be listed by July, Well Chip said in a statement.

“The funds to be raised will be instrumental to grow our pledge books of existing pawnshops and set up new pawnshops,” said Well Chip chief executive officer Ng Hooi Lang.

Well Chip is involved in the provision of pawnbroking services and business of retail and trading of jewellery. Currently, the group has 26 operating outlets in Johor, comprising 22 pawnshops and four retail outlets which are adjacent to its pawnshops.

The company’s IPO comprises entirely of new shares. Under the public issue, Well Chip is offering 30 million new shares to the Malaysian public of which half would be set aside for Bumiputera public investors.

Kenanga and CGS will jointly underwrite the entire 30 million new shares offered to the Malaysian public, Well Chip said.

The institutional offering, meanwhile, involves 45 million shares for institutional and select investors through private placement and another 75 million shares will be made available to approved Bumiputera investors, also through private placement.

All in all, the listing offers investors up to 25% in the company that logged a profit after tax of RM25.16 million for the financial year 2022 (FY2022) on the back of RM158.12 million revenue.

Proceeds from the IPO will be used as working capital to increase its pledge book, which in turn is expected to contribute to revenue, and as initial set-up costs and working capital for the new pawnshops to be opened. The rest will be used to defray listing expenses.

Kenanga Investment Bank is the principal adviser for the IPO. Together with CGS, Kenanga is also joint underwriter and joint placement agent for the IPO.