Passion Holdings to raise S$31.6m in IPO

And out of S$31.6m, S$18.6 million shall be used to expand its production capacity as well as its sales and distribution network in China whereas the remaining S$13m for general working capital purposes. I hate that part of 'general working capital purpose'. About 40% of the IPO proceeds to be used for that?!

You mean to say that without IPO, they would suffer some kind of problem with their 'general working capital'?

It's a waste of IPO money if a company does not have a clear & firm intention what they want to do next.

So yes, I will give this IPO a miss for sure.

China-based handicraft and furnishing manufacturer Passion Holdings plans to raise S$31.6 million in an initial public offering (IPO).

It is offering 90 million new shares and 36.5 million vendor shares at 25 Singapore cents each for a proposed listing on the mainboard. Two million shares will be available to the public while the remaining 124.5 million shares are allocated for placement.

The IPO is priced at an estimated price earnings ratio of 3.1 times based on its latest financial results.

For the financial year ended June, the company reported a net profit of 111.6 million yuan or around S$23.6 million, up a compounded annual growth rate of 32.2 per cent from the 2007 financial year.

The company designs, manufactures and retails a wide range of handicrafts and furnishings. The products are sold either under its brand name Passion or as original design manufacturer products through its distributors in China and overseas.

Passion said the net proceeds of S$18.6 million will be used to expand its production capacity as well as its sales and distribution network in China. It plans to increase the number of its Passion Art specialty stores and strengthen its Passion brand in the mainland.

The balance of the proceeds will be used for general working capital purposes.

The IPO will open on Monday and close on August 31. Trading of the shares is expected to start on September 2.

Genesis Capital is the issue manager and UOB Kay Hian is the underwriter and placement agent for the IPO.

From Channel NewsAsia, "China-based Passion Holdings plans to raise S$31.6m in IPO".


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