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Memiontec to raise funds in Catalist listing for regional expansion

WATER treatment firm Memiontec Holdings is looking to list on the Singapore bourse.

On Friday, it lodged its final prospectus, launching its initial public offering (IPO) of some 33.5 million placement shares at S$0.225 each, in conjunction with its proposed listing on the Catalist board.

There is no public offer. The placement represents about 15.2 per cent of the enlarged share capital of the company.

The remaining stake will be mainly held by executive chairman and CEO Tay Kiat Seng and managing director Soelistyo Dewi Soegiharto, who are co-founders of the group. Ms Dewi is also Mr Tay's wife. They will directly and indirectly own about 81.5 per cent of the company post-placement and will remain controlling shareholders.

The IPO will enable the group to continue expanding its businesses in existing markets, as well as venture into new ones or explore merger and acquisition (M&A) opportunities in the longer term.

It plans to use its net proceeds of about S$5.8 million to invest in build-own-operate-transfer (BOOT) projects and potential M&A, while expanding the sales and distribution of its systems and equipment business, as well as for general working capital.

BOOT projects, which the group started doing in Indonesia in 2016 with third-party entities, enable it to generate stable and recurring income streams, because over the concession period which can be decades long, the company is able to receive regular payment for providing operation and maintenance services as well as the supply of treated water.

Memiontec currently operates in Singapore, Indonesia and China. Indonesia and Singapore contributed 58 per cent and 40 per cent of the group's revenue in FY18. Mr Tay said that while there are bigger-ticket projects in the Republic, margins are better in Indonesia.

One region the group is eyeing is South-east Asia, which it plans to enter through business collaborations, strategic alliances, joint ventures, acquisitions or investments.

It is also looking at working with renowned water treatment firms and research institutes to pilot plants using innovative water technologies which will improve the yield of water produced and reduce energy and chemical consumption by membranes.

In the first six months of FY19, the company generated S$355,000 in net profit, which would have been S$788,000 excluding one-off listing expenses. In FY18, its net profit was S$4.6 million on a revenue base of S$24.5 million.  

The group has long-term customers from both the public and private sectors, such as Singapore's PUB, STATS ChipPAC and Sinarmas Group.

Based on its placement price, Memiontec's market capitalisation will be about S$49.6 million post-placement. The placement will close at noon on March 3, with the listing slated to begin at 9am on March 5.

The group's directors also plan to recommend dividends of at least 20 per cent of FY19 net profit, which will increase to at least 25 per cent for FY20.

Zico Capital is the sponsor and issue manager, while UOB Kay Hian is the placement agent for the IPO.