What Investors Need to Know About Versalink Holdings Limited’s Initial Public Offering

There’s going to be yet another new kid on the block in the form of Versalink Holdings Limited. The Malaysia-based office furniture makerjust launched its initial public offering (IPO) and is looking to raise S$5.9 million in net proceeds.

This year, other companies that went public include Japfa Ltd (SGX:UD2), Terratech Group Ltd (SGX: 40I), Spackman Entertainment Group Ltd (SGX: 40E) and Starburst Holdings Ltd (SGX: 40D).

What is Versalink?

Versalink, formed in 1991, is involved in the design, manufacture, and supply of a wide range of systems furniture and provision of workspace planning and consulting services to optimise usage of space. It has over 90 overseas dealers located in more than 40 countries all over the world. Some of its notable clients are Tenaga Nasional Berhad, Utusan Malaysia Berhad, Emirates National Bank Dubai, and Abu Dhabi Police General Headquarters.

Under systems furniture, the firm designs and manufactures furniture under its “Versalink” brand, catering to a broad customer base. It also provides manufacturing services on an original equipment manufacturer (OEM) basis for certain overseas furniture brands, based on the designs provided. Versalink also represents international brands such as Switzerland’s Züco, Dauphin Human Design of Germany, and Italy’s Sinetica Industries.

The company prides itself in offering a wide range of products and services, providing an efficient one-stop service. By having a well-stocked warehouse, the firm is also able to take on projects with tight deadlines.

Versalink has a research and development team that allows it to come with new designs and its “Versalink” brand has a track record of over 20 years in the office furniture industry.

Details of the IPO

A total of 37 million shares will be offered at S$0.30 per share. Out those, just 1.5 million shares, or 4.1%, will be offered to the public while the rest will be placement shares.

The IPO will close on 22 September 2014, Monday at 12 noon, with the shares debuting on the Catalist board two days later, on 24 September 2014 at 9am.

Out of net proceeds of S$5.9 million, the majority of the net proceeds at 45%, or S$3.4 million, will be used to acquire new machinery and setting up or acquisition of new production facilities for its subsidiary, Jemaramas Jaya.

S$377,000 will be used for acquisition of new machinery and setting up of new facility for another subsidiary, Steeltema; S$750,000 will be used for marketing, advertising and promotional activities while the balance of S$1.4 million will be used for working capital and general corporate purposes.

The market capitalisation, based on the post-IPO share capital of 135 million shares, will be S$40.5 million.

In the second part of the instalment, we will take a look at the financial statements, some risk factors that potential investors should consider and lastly, the valuation of Versalink. So stay tuned.

Keep up to date on the latest happenings in the market through a FREE subscription to Take Stock SingaporeSign up here for The Motley Fool’s weekly investing newsletter that will teach you how to grow your wealth in the years ahead.

Like us on Facebook to follow our latest news and articles.The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.