KUALA LUMPUR: Offering up to 30 per cent of Dagang Nexchange Bhd (DNeX) shares to third-party investors will allow it to bring in strategic investors that it can then leverage on to fuel future growth, group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said.
Syed Zainal said DNeX was evaluating its options in terms of which investors would bring the best value, amid reports that major Apple Inc supplier Foxconn Technology Group was among investors keen to buy a stake in it.
Taiwan's Foxconn reportedly was keen and in talks to buy a stake in DNeX, after losing its bid to acquire SilTerra Malaysia Sdn Bhd to DNeX and its consortium partner from China.
Foxconn is the main assembler of Apple's iPhones, with industry observers saying the Taiwanese firm's potential entry in DNeX would help expand SilTerra's business.
"At this juncture, we are evaluating our options in terms of which investors would bring to the table the best value proposition for DNeX," he told the New Straits Times.
Syed Zainal added that the company had yet to engage with any potential strategic partners and investors in relation to the recently-approved private placement, on an indicative issue price of 72 sen per share.
"In the event that any decision is made, we will make the necessary announcement accordingly. We are cognisant of the need for proper dissemination of information to the public and will release announcement on Bursa Malaysia on any material issue on a timely basis as required by the listing requirements."
He said the private placement might be implemented in multiple tranches within six months from the date of approval or any extended period as might be approved by Bursa.
The exercise duration also hinged on the take up rate of the placement shares, he added.
Syed Zainal said collaborating with strategic investors allowed DNeX the opportunity to leapfrog the business with a view that minority shareholders would benefit in the long run.
On why private placement instead of rights issue or other means to raise fresh capital, he said the placement enabled DNeX to raise additional funds without incurring interest costs compared to conventional bank borrowings which might affect its bottom line.
"We expect our gearing to reduce drastically, from 0.14 times as end 2019 to 0.04 post the private placement under a minimum scenario.
"It is also a more efficient and effective means to raise funds from the capital market as opposed to other forms of fund raising such as a rights issue," he added.
Syed Zainal also said DNeX's liquidity would improve with more than 3.8 billion shares issued with the private placement.
DNeX, he said was on a growth trajectory, firing up its engines in terms of business prospects in its core business segments of trade facilitation, system integration and consultancy, energy, telecommunication and technology.
"With a wider share base, it most certainly allows for ample participation in our growth prospects by institutional as well as retail investors."
He said DNeX's net assets per share would likely improve significantly from 0.27 cents as at December 31, 2019 to 0.42 cents post private placement under a maximum scenario.
Syed Zainal said the placement would partially finance the proposed acquisition of SilTerra, while funding its suitable and viable potential businesses or investments as well as its working capital requirements.