Federal International prices IPO shares at 30 cents apiece
FEDERAL International, which provides products and services to support the oil and gas industries in the Asian region, launched its initial public offer (IPO) for a mainboard listing yesterday.
It is offering a total of 44 million shares. Of these, 4.4 million shares are for public subscription while the rest are placed privately including 4.4 million shares which are reserved for employees.
The IPO is priced at 30 cents a share except the reserved shares that are being offered to employees at 29 cents apiece.
The IPO represents 25.11 per cent of Federal's enlarged share capital.
The offer price of 30 cents represents a historical price-earnings ratio of 6.9 times and a forecast multiple of 9.7 times. The historical net tangible assets per 20 cents par share, after adjustment for net proceeds, is 23.28 cents.
Federal expects to raise net proceeds of $12.2 million from the IPO which will be used mainly to expand its service and testing centre and consolidate its business operations in Singapore.
About $1.8 million will be used to finance the expansion of the business. The rest will be used for working capital purposes.
Federal's turnover increased from $26.7 million in 1995 to $80.3 million last year. Profit before tax also rose from $1.1 million to $8.3 million.
Federal's executive chairman, Mr Kok Kian Kiong, was confident of the outlook for the oil and gas industry.
"The listing will provide us with the funds to expand beyond our current role as an agent/distributor and stockists as well as to take on more and bigger projects," he said.
"We intend to forge strategic alliances with manufacturers to manufacture valves in Europe and other South-east Asian countries."
The IPO is managed by UOB Asia and closes next Thursday at noon.
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