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Sunday, October 13, 2013

Karex IPO to raise RM75m


KUALA LUMPUR: Karex Bhd, the world’s largest condom maker, expects to raise RM75mil from its initial public offering (IPO) on the Main Market of Bursa Malaysia on Nov 6, 2013.

The IPO will entail 67.5 million shares, representing 25% of the company’s enlarged capital. It consists of a public issue of 40.5 million new shares at RM1.85 each as well as 27 million existing shares up for sale.

Karex, which has a 10% global market share, has allocated some 47.25 million shares for institutional investors, while 20.25 million will be made available to retail investors.

Chief executive officer Goh Miah Kiat expects the condom industry to flourish further, driven by growth in the global population, which is projected to reach eight billion by 2025.

“The prospect of the condom industry remains bright and would continuously grow. The global condom market is expected to grow at a compounded annual growth rate of 7.5%, from 22.8 billion pieces in 2012 to 30.4 billion pieces in 2016,” he said at the launch of Karex’s prospectus yesterday.

RHB Investment Bank head of equity capital markets Gan Kim Khoon said: “At this juncture, the book, in terms of institutional offering, is significantly oversubscribed. We had very strong demand from institutions in Malaysia, Singapore and Hong Kong.”

Karex, which expects to double its annual capacity to six billion pieces by 2015, is expanding its biggest factory in Johor. The company has acquired 7.28ha to build a new factory there.

Goh hopes construction will start early next year and for the factory to be completed by the year-end.

Its facilities in Port Klang and Thailand have also been beefed up to meet capacity targets in 2015.

Of the RM75mil expected proceeds, RM42mil will be used for capital expenditure, RM14mil for working capital, RM10mil for repayment of bank borrowings and RM5mil for listing expenses.

The balance RM4mil will going towards research and development.

The commercial market contributed 60% of total revenue for the financial year ended June 30, 2013.

Karex makes condoms for customers such as Ansell Ltd (Lifestyle brand), Reckitt Benckiser Plc (Durex), Line One Laboratories Inc (Trustex) and Global Protection Corp (One), among others.

The tender market and own-brand manufacturing contributed 36% and 4%, respectively.

Applications for the IPO will close at 5pm on Oct 23.

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