[KUALA LUMPUR] Convenience store chain operator 99 Speed Mart Retail launched Malaysia’s biggest initial public offering (IPO) in seven years, which is expected to raise up to RM2.36 billion (S$701 million) for its Main Market listing.
The IPO comprises up to 1.03 billion existing shares and 400 million new shares, priced at RM1.65 per share.
At RM2.36 billion, the IPO would be Malaysia’s largest offering since the listing of South Korea’s Lotte Chemical Titan in 2017, raising close to RM3.8 billion.
The listing is scheduled on Sep 9, aligning with the company name “99 Speed Mart”.
At the IPO prospectus launch on Thursday (Aug 15), its founder and chief executive Lee Thiam Wah said the listing will allow the company to raise funds to accelerate its expansion, as well as operate in a more transparent and efficient way.
He emphasised that 99 Speed Mart is operating under a mini-market model, which differentiates it from convenience stores such as 7-11, and focuses on providing affordable groceries to neighbourhood consumers.
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From mom-pop sundry shop to modern mini market
Founded in 1987 as a traditional sundry shop in Selangor, 99 Speed Mart has continued expanding its presence over the years and growing its network to 2,651 outlets across Malaysia, with a majority of the outlets concentrated in the Klang Valley area.
The convenience store operator also established an online platform offering bulk purchases for retail and enterprise customers in September last year, as well as incorporating a trading company in China for product procurement.
Based on Frost and Sullivan Malaysia’s market report on the country’s mini-market industry, 99 Speed Mart is the largest mini-market player in Malaysia, holding a market share of 40 per cent by revenue in 2023.
The report stated that Malaysia’s grocery retail segment registered a compound annual growth rate of 7.2 per cent from 2019 to 2023.
“The demand for this segment continues to grow robustly as the population increases. We will maintain our current business model and focus on the Malaysian market for now,” he told The Business Times, adding that there are no plans to expand overseas or enter into the premium segment.
99 Speed Mart alternate director Albert Lee echoed Lee Thiam Wah, noting that close to 60 per cent of the IPO proceeds of RM660 million (from the 400 million new shares issuance) will be utilised for outlet expansions across Malaysia.
He said the company plans to expand its outlet network to 3,000 by end-2025.
Along with the outlet expansion, the convenience store operator will allocate RM100 million (15 per cent of the proceeds) to set up another six distribution centres in different states to support growing outlet operations.
“Our target is for each store to serve 1,500 to 2,000 households; currently, our outlets in Klang Valley are serving between 2,500 and 2,600 consumers,” he said, noting that the average sales for each outlet is around RM400,000 to RM600,000 a year.
The South-east Asian nation’s market regulator and stock-exchange operator Bursa Malaysia earlier this year said they committed to a three-month approval period for IPO applications received from Mar 1. The process previously took as long as six months to complete.
Malaysia has rekindled favour with global investors after years of lacklustre growth and policy confusion due to a rapid turnover in leadership. The country’s artificial intelligence (AI) push has also made it a key bet on AI-related services in the region.
More outlets in northern and east-coast states
Regarding future expansion, Albert Lee said the company is planning to establish more outlets in northern and east-coast states, where 99 Speed Mart currently has limited presence.
The company is also planning to utilise RM102.6 million or 15.5 per cent of the proceeds to purchase new delivery trucks and upgrade existing outlets.
It will use RM45 million from the proceeds to pare down its borrowings, and the remaining RM23.4 million to cover listing expenses.
The company has started accepting orders from both retail and institutional investors. The retail offering will close on Aug 23, while the institutional tranche will conclude on Aug 27.
CIMB Investment Bank, Affin Hwang Investment Bank and RHB Investment Bank are underwriters in the offering.
Chu Kok Wei, chief executive of group wholesale banking at CIMB Investment Bank, said 99 Speed Mart is set to be the largest IPO by market capitalisation and IPO deal size. Participants include 14 cornerstone investors, including Malaysian government-linked investment companies and asset managers, whose support covers 55 per cent of the IPO deal size.
The deal will further boost Malaysia’s IPO market, where listings so far this year have raised over US$450 million. The country’s IPO capital market topped the South-east Asia bourse in terms of total IPO funds raised in the first six months of 2024.
This year’s IPOs have included palm oil producer Johor Plantations Group – which at US$156 million was the largest debut in the country since 2022 – and Alpha IVF Group’s US$98 million listing.
