An 11th hour pullout

Focus Point Holdings Bhd, which was en route to a listing on the ACE Market yesterday, hit a major speed bump when it deferred its initial public offering (IPO) just an hour before opening bell.

This is the first time that a company had set a date for listing on the Malaysian stock exchange, and deferred it on the debut day.

Focus Point controls the largest chain of optical shops and centres in the country, with an estimated 10% market share for the financial year ended Dec 31, 2009.

In a late-night statement issued to the media yesterday, Bursa Malaysia said: “The company made an announcement on its decision to defer its listing this morning pending clarification of a complaint made to the regulators.”

It added that “the regulators have engaged with the issuer on the deferment and required the issuer to announce its next course of action as soon as possible”.

In a statement issued before midnight, Focus Point clarified that the complaint to the authorities came from an unidentified source that had pointed out “three points of allegations” which the company refuted in the same statement.

Earlier in the day, in a statement issued to the stock exchange, Focus Point had said the listing had been deferred, “pending an announcement”.

“The company wishes to inform members of the public that business is as usual in Focus Point and all its outlets, and the deferment of the listing date has no impact on its business operations,” it added.

Datuk C L Liaw, President and CEO of Focus Point Group

Focus Point said in the statement that the company had strong fundamentals and solid financial standing as disclosed in its prospectus dated June 30, 2010.

“The company wishes to assure investors that all monies are currently securely held by both the placement agent, OSK Investment bank Bhd, as well as Malaysian Issuing House Sdn Bhd,” it added.

OSK Investment Bank is the principal adviser, sponsor, underwriter and placement agent for the exercise.

Focus Point also apologised for “any inconvenience caused and expects to provide further details in due course”.

During the day, speculation swirled regarding the reasons behind the last-minute deferment. Among the speculation was that it could be due to its share placement exercise.

In 2006, two companies — Hospitech Resources Bhd and GP Ocean Food Bhd — called off their listing after setting a date.

Hospitech, a manufacturer of disposable hospital equipment, aborted its IPO exercise the day before it was scheduled to trade on the then Mesdaq board on April 20, 2006.

GP Ocean was slated to be listed in July 2006, but the company announced a deferment in early June, two weeks before its prospectus was to be launched.

The two companies’ IPO were aborted and monies returned to investors after the Securities Commission found irregularities in their IPO submission.


IPO to fund expansion of outlets
According to its prospectus, Focus Point was expected to raise RM16.07 million in gross proceeds from the public issue of a total of 41.2 million new ordinary shares of 20 sen par value at an issue price of 39 sen. Another sale of 15.8 million existing shares would generate RM6.16 million accruing entirely to the selling shareholder.

Of these 57 million shares (41.2 million plus 15.8 million) 38.75 million had been reserved for private placement.

In a July 19 statement, Malaysian Issuing House said the placement agent had confirmed the subscription of 35.55 million shares reserved for private placement to identified shareholders. This was 3.2 million shares less than the 38.75 million shares made available for private placement as per the company’s prospectus.

At its prospectus launch on June 30, Focus Point president and CEO Datuk Liaw Choon Liang said the company aimed to increase its number of outlets in Malaysia to reach 200 by next year from 144 outlets currently.

Of the IPO proceeds, RM7.74 million was to go towards its new outlets and RM1.2 million for upgrading and refurbishment of existing outlets.

Another RM1.5 million would be used to part-repay bank loans with the remainder for working capital and listing expenses. Liaw had said the company would see savings of RM109,500 annually from the repayment of the loans.

Focus Point’s IPO would have come on the heels of a weak market for new listings this year. Most IPOs this year have not fared well, with many trading below their offer price on the first day of trading (see table).

Of the 16 companies that made their debut, nine chalked up a positive close on the first day of trading while seven stocks ended lower. The top performer was EA Holdings Bhd with a 164% gain, and the biggest loser was JCY International Bhd with an 8.8% loss.


This article appeared in The Edge Financial Daily, July 28, 2010.