MALAYSIA'S crushed limestone producer GCCP Resources launched its initial public offering (IPO) on Singapore Exchange's Catalist board on Monday, but its CEO, Alex Loo, is not selling any of his shares in the IPO.
Instead, Mr Loo, who owns 53.8 per cent of the post-placement share capital, has committed to a moratorium of up to three years on his holdings in GCCP, citing the stable demand for his company's product as the reason for his decision.
"I am quite confident in (GCCP's) product. There's a shortage in the market for limestone," he said. "Due to its extensive applications and the fact that demand is generally driven by necessity and not economic cycles, the price of calcium carbonate has remained relatively stable over the years."
The group's COO, Pang Kim Chon, has also voluntarily committed to the moratorium.
Mr Loo also pointed out that all pre-production work for the company's quarries has already been completed, and the proceeds from the IPO will be used to fund the production phase for a new quarry.
The company is aiming to raise net proceeds of about S$28.1 million from 122 million shares - representing about 15.2 per cent of its enlarged share capital of 1.193 billion shares - at 23 Singapore cents each. However, the shares are available only by way of placement, as the company does not wish to go over its target, according to representative Alvina Tan.
GCCP currently owns one operational quarry, Gridland Quarry, in Ipoh, Perak. The proceeds of the IPO will go into plans to make another quarry site it owns, Hyper Act Quarry - also in Ipoh - fully operational by Q1 2016. This new quarry spans approximately 60 acres, more than twice the area of Gridland, which covers about 25 acres.
The company did not disclose its intended dividend payouts; Ms Tan instead said that GCCP will focus the proceeds on reinvestment.
"It's probably a little too early to tell," she said of payout plans. "After the money has been raised it will be put into building the new powdered limestone plant."
CFO Ian Lim said he would be unable to give an estimate until the new plant is fully functional. However, he also said he is optimistic about the revenue to be generated from it.
"This is a very lucrative business," he said. "The profit margin is more or less 50 per cent."
Trading of GCCP's shares is expected to begin on April 30, 2015. PrimePartners Corporate Finance is the issue manager, sponsor and placement agent for the IPO.