Fuel products provider Union Gas Holdings has launched its initial public offering (IPO) for a listing on the Singapore Exchange's Catalist board.
The home-grown firm - known for its "Union" brand of bottled liquefied petroleum gas (LPG) cylinders - is offering 60 million shares at 25 cents apiece. These comprise 30 million new shares and 30 million vendor shares.
Union Gas Holdings said yesterday that 58.72 million shares will be placed with institutional investors, while the other 1.28 million shares will be made available to the public.
The shares represent 30 per cent of its enlarged share capital and are priced at 6.95 times of its pro forma earnings per share of 3.6 cents for the year ended Dec 31 last year.
Union Gas Holdings is among the biggest suppliers of bottled liquefied petroleum gas cylinders for domestic use here, serving more than 140,000 households with over 100 delivery vehicles.
It also sells and distributes compressed natural gas (CNG) and diesel to both retail and industrial customers.
The IPO is expected to raise net proceeds of about $5.72 million. About $4 million will be used for business expansion through acquisitions of dealers for its retail LPG business, Union Gas Holdings chief financial officer Sylvia Lio told a briefing yesterday.
Another $1 million will go to diversifying the company into the supply and retail of piped natural gas to customers in the services and manufacturing industries in Singapore, while the rest will be used for general working capital.
Chief executive Alexis Teo said: "We have observed a gradual attrition of smaller players in the retail LPG industry mainly due to increased operating costs, stricter regulations and higher customers' expectations, and we think this will open the door for us to lead a consolidation of the retail LPG industry."
Union Gas Holdings also plans to launch its new business to supply and sell piped natural gas to the services and manufacturing industries here, including industrial and commercial customers in the food and beverage industry. The firm was awarded a gas retailer licence from the Energy Market Authority of Singapore in April.
The group delivered a 66.3 per cent jump in net profit from $2.4 million in 2014 to about $4 million last year. Gross margin rose from 18.4 per cent to 32.5 per cent over the same period.
It said it intends to distribute dividends of not less than 50 per cent of its net profit to shareholders in the financial year ending Dec 31.
The placement will close at noon on Wednesday next week. Listing and trading of the shares are expected to start on Friday next week.