A Malaysian sustainable timber company is seeking to raise $3.15 million in net proceeds ahead of a listing on the Singapore Exchange's Catalist board.
Jawala is offering 18 million shares or 15 per cent of the company at 25 cents a piece.
The public offer comprising 400,000 shares closes at noon next Wednesday with trading to start on June 1.
The firm made a net profit of RM2.5 million (S$841,300) and revenue of RM12.0 million in the 12 months to July 31, 2017, after commencing logging operations in October 2016. Earnings of RM4.15 million in the first quarter of 2018 were nearly double the level in the same period in 2017 while turnover was RM10.51 million.
Jawala will have a market cap of $29.6 million upon listing. The sponsor and issue manager is UOB Kay Hian.
Jawala holds a 100-year licence to manage a 11,043-hectare plantation in Sabah's Sapulut Forest Reserve.
It harvests and supplies wood from salvage logging to produce sawn timber, veneers and plywood.
Executive director and chief executive Jema Khan said one reason for listing was a desire to ensure continuity for the long term: "We feel a 100-year licence should not be held by a private company.
"If you want to ensure continuity of the business, the structure ideally would be a public company."
Jawala is offering 18 million shares or 15 per cent of the company at 25 cents a piece. The public offer comprising 400,000 shares closes at noon next Wednesday with trading to start on June 1.
He added that the company chose to list in Singapore because of the well-structured timeline and the opportunity to reach international markets.
Jawala has no plans to export its products in the near future, preferring to maintain quality by delivering the wood fresh to local mills, but does not rule out the possibility of doing so later.
It intends to use listing proceeds to develop the plantation site for harvesting in 2026 and invest in research efforts to improve yields, wood quality and sustainability practices. A recent timber shortage, coupled with demand from countries like China, which has banned logging in national forests, is expected to keep driving prices up, said Mr Khan.
The firm also hopes to acquire new plantations to increase capacity and tide the company over an expected revenue decline in 2021.