SINGAPORE (THE BUSINESS TIMES) - Cleaning services company LS 2 Holdings ended its trading debut on the Singapore Exchange’s Catalist board yesterday at 88 cents, 340 per cent higher than its initial public offering (IPO) price of 20 cents.
This prompted the Singapore Exchange Regulation to issue a “trade with caution” alert last night, with the regulator adding that it is reviewing trades in the company’s shares.
Earlier in the day, shares of the company were trading at 85 cents by 10.35am, 2.8 times the opening price of 29.5 cents. The stock also rose to hit an intraday high of S$1.60.
This was in contrast to the Straits Times Index which fell 3.5 per cent, SGX RegCo said.
According to Catalist rules, a proportion of post-invitation share capital in public hands must be at least 15 per cent at the time of listing and the number of public shareholders must be at least 200.
The bourse watchdog noted that out of 207 placees, 166 sold their entire allotment, which significantly reduced the distribution. Majority of these accounts are linked to the same trading representative and the selling was concentrated within the first hour of trading.
The regulator added that it “will continue to monitor the trades in LS2 shares and will take the necessary actions including looking into the placement, reviewing the activity and referring the matter to statutory authorities where warranted”.
LS 2 was looking to sell 27.75 million shares at a price of 20 cents apiece to raise total proceeds of $5.6 million. The IPO does not have a public tranche.
The estimated net proceeds, after deducting expenses relating to the placement, will be $4.4 million.
The group will have a theoretical market capitalisation of $37 million after the placement.
The bulk of the net IPO proceeds – $3 million – will be used to fund its business expansion plans. This includes strengthening LS 2's market position in Singapore, expanding the scope of service offerings, engaging in strategic acquisitions and joint venture partnerships, as well as investing in equipment and technology.
The remaining $1.4 million of the proceeds will be spent on working capital, the company said previously.
LS 2 chief executive and executive director Alvin Ong said in a press statement: "We believe the listing is an important platform that will boost the brand value of the company and create new business opportunities."
The company offers conservancy, facilities cleaning, housekeeping, school cleaning, road and beach cleaning services, as well as pandemic disinfection services, for both the public and private sectors in Singapore.
Town councils, facilities managers for commercial and private residential properties, public and private education institutions and private companies are some of LS 2’s customers.
LS 2 intends to diversify its offerings to include horticultural services and infrastructure-level cleaning services such as road cleaning services and waste management services.
RHT Capital is the full sponsor and issue manager for the IPO, while Soochow CSSD Capital Markets (Asia) is the placement agent.