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7-Eleven IPO is back, but smaller?
by Cals Wed 15 Jan 2014, 10:20
| 7-Eleven IPO is back, but smaller? |
| Business & Markets 2014 |
| Written by Wei Lynn Tang of theedgemalaysia.com |
| Wednesday, 15 January 2014 09:49 |
KUALA LUMPUR: The initial public offering (IPO) of 7-Eleven Holdings Bhd, formerly known as Seven Convenience Bhd, which runs the country’s largest convenience store chain, is back after the Securities Commission (SC) rejected it in November last year. This time, the funds raised from the exercise is believed to be lower than the RM700 million reported earlier.
The listing is slated to take place within the first half of this year, following a resubmission of its draft prospectus to the regulator last Thursday.
In its new draft prospectus, 7-Eleven Holdings is allocating a larger percentage (86.3%) of its IPO proceeds for capital expenditure (capex) compared with 67.9% in the previous draft prospectus dated Sept 24, 2013.
The capex will be funded from the proceeds raised from the public issue and internal funds.
However, the allocation for working capital of 24.2% has been reduced to 3.5%.
7-Eleven Holdings said it plans to spend some RM352 million over the next three years to fund the expansion of its store network, on minor and major store refurbishments, the construction of a new combined distribution centre and upgrade of information technology systems.
As at Sept 30, 2013, 7-Eleven Holdings’ cash and bank balance stood at RM59.9 million.
The number of shares to be offered remains the same as that proposed in the previous draft prospectus.
The IPO will see an offer of up to 530.33 million shares, comprising a public issue of 181.35 million shares and an offer for sale of up to 348.94 million existing 7-Eleven Holdings shares. Institutional offering takes up 490.78 million shares, while retail offering constitutes 39.55 million shares.
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| 7-Eleven Holdings Bhd, formerly known as Seven Convenience Bhd, runs the country’s largest convenience store chain. |
UBS is the other joint global coordinator and joint book-runner while CIMB Investment Bank Bhd is the other joint book-runner.
On Dec 23, 2013, 7-Eleven Holdings and Berjaya Retail entered into a supplemental conditional share sale agreement as part of the pre-IPO reorganisation to acquire the entire issued and paid-up capital of 7-Eleven Malaysia to be satisfied via the issuance of 1.052 billion new shares at an issue price not stated.
“The equity price to earnings (PE) multiple is within the range of the adjusted PE multiples of the comparable companies of between 12.54 times and 57.36 times,” it however said, with regard to the purchase consideration.
7-Eleven Holdings also noted in the new prospectus that the equity value is higher than the value attributable to 7-Eleven Malaysia Group at the time of the privatisation of Berjaya Retail in 2011 of RM468.99 million.
“This is due to the higher PE multiple accorded to the equity value as a result of the significant increase in the overall PE multiple accorded to the comparable companies since the delisting of Berjaya Retail, and higher profit after tax of 7-Eleven Malaysia Group as compared to the profit after tax of 7-Eleven Malaysia Group at the time of the privatisation of Berjaya Retail,” it said.
In the nine months ended Sept 30, 2013, 7-Eleven Holdings recorded a net profit of RM36.6 million on revenue of RM1.25 billion, an increase of 5.7% and 18.6% respectively over its previous corresponding period.
7-Eleven Holdings seeks to double its store openings to 600 for the next three years, from 331 stores from 2010 to 2012.
This article first appeared in The Edge Financial Daily, on January 15, 2014.
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