Malaysia's Top Glove shrinks Hong Kong fundraising plan by 71 per cent on second try as stock price tumbles at home
Top Glove, the world's largest producer of medical gloves, has slashed its fundraising target in Hong Kong in its second attempt to sell shares in the world's third-largest capital market.
The Kuala Lumpur-based company would raise between HK$3.68 billion and up to HK$4.24 billion (US$545 million) inclusive of an overallotment option through an initial public offer (IPO) in Hong Kong, according to Top Glove's statement to Bursa Malaysia before filing its preliminary listing document in Hong Kong today .
"After taking into account the prevailing share price of the company and the funding requirements of the group, the board has resolved to revise the proceeds to be raised from the proposed issuance," Top Glove said in its filing to the Malaysian bourse.
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Top Glove delayed its first Hong Kong IPO attempt in August, originally slated for US$1.9 billion, more than a year after the United States banned imports of its personal protection equipment, citing evidence of forced labour practices at its factories. The ban was lifted on September 10, after US authorities "had determined upon additional information that Top Glove's products were no longer being produced by forced labour," according to a statement.
That did not help Top Glove's shares in Kuala Lumpur, which plunged 57 per cent between the US ban and its rescission, wiping out 36.6 billion ringgit (US$8.8 billion) in market value over 14 months. The company, along with the air ventilator maker Shenzhen Mindray Bio-Medical Electronics, were among the biggest winners during the Covid-19 pandemic, as worldwide demand for personal protection equipment (PPEs) and medical devices soared.
A dual primary listing in Hong Kong would help broaden Top Glove's investor base, enabling it to reach new institutional investors including Chinese funds and wealth management investors, said the company, whose shares are traded in Singapore and Kuala Lumpur.
This was not Top Glove's first revision. The company cut its fundraising target to about US$1 billion in April before its listing application lapsed in August.
Source: KPMG. SCMP Graphics alt=Source: KPMG. SCMP Graphics
Top Glove now plans to issue up to 793.5 million new shares, or 9 per cent of its enlarged issued share capital, just about half the 1.5 billion shares it had originally hoped to sell in February. Top Glove said the reduction was intended to minimise dilution to existing shareholders' stakes.
It plans to use the net proceeds to more than double its production capacity to 201 billion pieces by 2025, from 100 billion pieces. It will build six factories, adding to the 37 plants it already has globally, most of which are in Malaysia.
Top Glove also plans to allocate about HK$10 million to strengthen its "corporate governance framework with a particular focus on improving its labour practices," in line with international labour organisations' standards, it said in the filing.
CICC is the sole sponsor of the deal. The company's IPO plan is now subject to approval by the listing committee of the Hong Kong Exchanges & Clearing Limited, the operator of the city's bourse.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
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