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Hot stock: Darco shares surge after it raises S$19.6m from strategic Hong Kong investor
A STRATEGIC investor from Hong Kong is buying a 29.5 per cent stake in water treatment specialist Darco Water Technologies for at least S$19.6 million.
Robert Wang Zhi, who is chairman of Hong Kong-incorporated water supply and wastewater treatment group, Future Investment Enterprise, will buy between 23.99 million and 30.3 million of new Darco shares at 65 Singapore cents apiece. This represents a 15 per cent premium from Darco's weighted average share price of 56.5 Singapore cents as at Oct 20, when the agreement was signed.
With the completion of the placement, the issued shares of the group will be increased to a minimum of 81.31 million and a maximum of 102.55 million.
The number of shares will depend on an ongoing acquisition that Darco is pursuing, and will be adjusted to ensure that Mr Wang ends up with a 29.5 per cent stake.
Additionally, Mr Wang will also be granting a loan of S$4 million, which will be solely used for the working capital of the group's subsidiary, Wuhan Kaidi Water Services.
Darco intends to utilise the net proceeds from the deal to finance business expansion, improve cash flow, increase working capital, and for general corporate purposes, the group said on Monday.
Darco shares closed 2.7 per cent or 1.5 Singapore cents higher to 58 Singapore cents apiece on Monday.