Exclusive: Teak Capital to stay invested in Aemulus post-IPO

Aemulus launched its prospectus. From left: TA Enterprise Bhd MD and CEO Alicia Tiah, Aemulus independent non-exec chairman Chok Kwee Bee and CEO Ng Sang Beng.

Aemulus Holdings Bhd, an automated test equipment design house, which is slated for an initial public offering (IPO) on Bursa Malaysia, will be Teak Capital Sdn Bhd‘s first public-listing exit in its Teak Ventures fund portfolio.

Malaysian venture capital firm Teak Capital has been invested in Aemulus since 2010, for an undisclosed amount. The firm, however is not exiting its investment entirely upon IPO.

According to Aemulus’ prospectus, substantial shareholder Teak Ventures holds 9.74 per cent in the investee company prior to the IPO, which it will dilute slightly to 6.82 per cent post-IPO.

The IPO is planned for on September 15, to debut on the ACE Market of Bursa Malaysia.

Teak Capital is on a divestment track for its inaugural fund, Teak Ventures this year and the next, as the fund hits maturity.  Through this fund, the firm has already invested MYR40 million ($12 million) in 10 companies.

Related story: Malaysian VC Teak Capital plans IPO exit

Among the key shareholders of Aemulus, founder and chief executive officer Ng Sang Beng will decrease his shareholding from 22.77 per cent to 17.85 per cent after the IPO; while co-founder and chief operating officer Yeoh Chee Keong’s equity will adjust from 15.5 per cent to 11.66 per cent.

Teak Capital managing director Chok Kwee Bee said Aemulus had an option to do a trade sale but had decided on the IPO route to realise the value of the company.

“Since the founders are very passionate about the business, they wanted to continue building up the company, so we decided to go for an IPO,” she told DEALSTREETASIA.

She added that the company is not fazed by the downturn in the Malaysian stock market as companies cannot time the market.

“It’s very hard to time a listing as the process takes almost a year. You can start planning an IPO now but you can’t tell whether the market will be good or bad next year,” she said.

“We deliberated on that and since our shares were fully placed out, we decided to go ahead with the listing so that we can go back to focusing on building the business,” Chok noted on the response to Aemulus’ IPO.

Chok, who also joined Aemulus’ board of directors as independent non-executive chairman, said the IPO has attracted some “blue chip local institutional funds” but declined to reveal names.

The company, however, noted that its 43.885 million offer shares reserved for placement to identified investors were oversubscribed.

IPO in place

Aemulus launched its prospectus yesterday, to offer 131.675 million ordinary shares of MYR0.10 each at an issue price of MYR0.28 per share. Its IPO consists of a public issue of  87.79 million new shares, and offer for sale of 43.89 million existing shares.

The design house intends to raise MYR24.58 million ($5.84 million) through its public issue, of which MYR12.88 million will be used as working capital, MYR6 million will be used for research and development (R&D) expenditure and MYR2 million for the purchase of property, plant and equipment.

The group will also use MYR1.2 million for new marketing, branding and promotion initiatives.

In her speech at the launch, Chok said Aemulus boasts a clientele of primarily large global multinational semiconductor test and assembly companies in Malaysia, Singapore, China, USA, South Korea, Phillippines, Thailand and Germany.

About 60 to 65 per cent of the company’s revenue comes from exports.

“I believe Aemulus is ideally positioned to exploit the growth potential of the semiconductor tester industry which is closely tied to the electrical and electronics industry,” she said, confident that the group’s intention to re-invest into R&D, amped-up marketing and product promotion strategy will help Aemulus expand.

Chok added at the sidelines of the launch: “(Aemulus) still has a long way to go, listing is the beginning of the journey. We hope that the company will continue to focus on research and development (R&D) and create better products to build the company into more than what it is.”

Ng told local media during a press conference that the company is looking to expand further in key markets like China and US.

“We are now going to look more into China and the US, where we already are but these are big markets. At the same time, we will expand to Japan and Taiwan in the next 12 to 24 months,” he said.

On whether the currency headwinds affect Aemulus, chief financial officer Kan Ky-Vern said the stronger US dollar to Malaysian Ringgit works in the company’s favour as Aemulus sells in US dollar.

“The weakening Ringgit does not affect us, because we are largely selling to overseas markets, and in US dollars. We also have relatively relatively large margins, in that our income is bigger than our cost,” he explained.

The group is principally involved in the design, engineering and development of automated tester equipment (ATE), which are used in wireless applications such as mobile phones, tablets, wireless networking routers and other wireless-enabled products.

TA Securities Holdings Bhd is Aemulus’ principal adviser, sponsor, managing underwriter, joint underwriter and joint placement agent for the IPO.

Affin Hwang Investment Bank Bhd will be acting as the other joint placement agent and along with Mercury Securities Sdn Bhd and M&A Securities Sdn Bhd meanwhile, will also be acting as joint underwriters.


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