From left: Vetece Holdings Bhd executive director and CEO Chan Wai Hoong, non-independent executive vice-chairman Vernon Tee Chee Chiang and independent non-executive chairman Thomas Chew Hock Hin, with Kenanga Investment Bank Bhd executive director and head of group investment banking and Islamic banking Datuk Roslan Tik at Vetece's IPO prospectus launch (Photo by Shahrill Basri/The Edge)

KUALA LUMPUR (Aug 8): Enterprise software firm Vetece Holdings Bhd on Thursday launched its initial public offering (IPO) on the ACE Market which would raise RM34.3 million.

The IPO, priced at 25 sen per share, involves a public issue of 98 million new shares and an offer for sale of 39.20 million existing shares, according to the official prospectus. All in all, the listing offers investors up to a 35% stake in the company.

Application for the IPO shares will close on Aug 14, and listing has been scheduled for Aug 28.

Vetece mainly provides software for businesses, including implementation, maintenance, support and professional services as well as resale of hardware and software. The company’s clients are mostly in the telecommunications and financial services industries.

Telekom Malaysia Bhd (KL:TM) is the single-largest client for Vetece, accounting for more than half of its revenue so far this year. The company also counts Telstra Corp Ltd in Australia and banks in Malaysia as its clients.

Under the public issue, the company is allocating 19.6 million new shares to the Malaysian public and 9.8 million shares to eligible persons. Vetece is also offering 68.6 million new shares to select investors through private placement.

The sale of new shares would raise RM24.5 million, and about 27% of the proceeds has been set aside to pay hardware and software licensing fees. The company has also earmarked about 9% of the proceeds for roll-out of new core products and services, and 13% to strengthen its Singapore operations.

Vetece also budgeted 15% of the proceeds for the establishment of a centre-of-excellence for software, 16% for loan repayment, and the rest to defray estimated listing expenses.

Meanwhile, the offer-for-sale of 39.20 million existing shares through private placement to select investors is expected to gross RM9.8 million, which would accrue entirely to founder and executive vice chairman Tee Chee Chiang.

Kenanga Investment Bank is the IPO’s principal adviser, sponsor, underwriter and placement agent.