PETALING JAYA: Oppstar Bhd
plans to use most of its funds raised in its upcoming initial public offering (IPO) for new professional hires in an effort to expand its market reach overseas.
The company which is en route to a listing on the ACE Market is an integrated circuit (IC) design services company that engineers the layout of ICs.
“Most of our hires are engineers and we plan to increase our headcount from about 220 to 500 eventually post-listing. Our hires will mostly be from Malaysian engineers as we find they are good,” Oppstar’s executive director and chief executive officer Ng Meng Thai said at a briefing yesterday.
The company derives about 80% of its revenue from overseas clients mainly from China and Japan while the Malaysian business is derived from the multinational companies that are situated in the country.
“We would like to set up offices in Singapore, India and Taiwan from the funds raised by this listing. These new markets will give us access to new customers,” Ng said.
Oppstar in its prospectus document said it targets to raise RM104.25mil through the issuance of 165.48 million new shares or 26.01% of its enlarged new share capital base at an IPO reference price of 63 sen per share.
Of the public funds raised, 47.96% (RM50mil) of the proceeds is allocated for the expansion of its workforce and 23.98% (RM25mil) is for the establishment of new offices.
Another 11.51% (RM12mil) is planned for research and development expenditure while 12.14% (RM12.65mil) will be channelled towards working capital.
The remaining proceeds of 4.41% (RM4.6mil) will be used for listing-related expenses.
Oppstar also said that it intends to declare a yearly dividend of at least 25% of its net profit.
“We are targeting a double-digit growth in our top and bottom lines upon listing. Despite the economic slowdown, we design for ICs that are used in two to three years time.
“Product development by our clients don’t stop even though there is an economic slowdown,” Ng said.
He said the demand for IC design has grown at an exponential rate over the years.
“Based on a report from our independent market researcher, the industry remains robust.
“There is continuous demand for technological advancements as well as the increasing uptake of IC design services by many semiconductor companies such as integrated device manufacturers, fabless companies, fab-lite companies and external design houses given its increased complexity and higher costs involved,” Ng said.
Affin Hwang Investment Bank is the principal adviser, sponsor, sole placement agent and sole underwriter for this exercise.
The public issue portion of the IPO is now available and will close on March 3 at 5pm.
