Study

Home improvement retailer Mr. DIY Group (M) Bhd, whose shares are valued at a price-to-earnings ratio of 31.6 times, is raising a total of RM1.5 billion from its Main Market listing exercise at RM1.60 per share.

This will be the largest initial public offering (IPO) on Bursa Malaysia in three years. Based on the issue price of RM1.60 per share, Mr. DIY is valued at a market capitalisation of RM10 billion higher than several public-listed banks on Bursa Malaysia, including AmBank Bhd and Alliance Bank Bhd.

Of the total, a whopping RM1.2 billion will go to the promoters who are offering to sell their shares, according to its prospectus on Bursa Malaysia.

Its promoters are Bee Family Ltd, Tan Yu Yeh, Tan Yu Wei, Yeh Family (PTC) Ltd, WEI Future Capital Ltd, Hyptis, which holds three Creador funds, and Platinum Alphabet. Prior to the listing exercise, Bee Family held a 52.6% stake, Hyptis 18%, and Platinum Alphabet 7.1%.

Meanwhile, the remaining RM301.44 million raised through the issue of new shares by the listed entity will be utilised for debt repayments (RM276.14 million) and the covering of IPO fees and expenses (RM25.3 million).

As of June 30, the retail groups total borrowings stood at RM608.85 million, giving it a gearing ratio of 1.34 times. Upon listing, its gearing will drop to 0.22 times with borrowings of RM153.85 million.

The groups IPO comprises an offering of up to 941.49 million shares, of which 779.95 million shares are part of the institutional offering and 161.53 million shares are under the retail offering portion.

Datuk Azlam Shah Alias chairs the board as non-executive chairman, while its executive directors are Tan Yu Yeh, who is also executive vice-chairman, and CEO Adrian Ong Chu Jin.

Its non-executive directors are Brahmal Vasudevan, who is the founder and CEO of Creador, Ng Ing Peng, and Leng Choo Yin.

For the financial year ended Dec 31, 2019 (FY19), Mr. DIY posted a net profit of RM317.57 million, a 14% year-on-year increase from RM308.33 million.

Its revenue increased to RM2.28 billion in FY19 from RM1.77 billion a year earlier.

The group also highlighted the impact of the Covid-19 pandemic on its operations, which resulted in lower revenue for March and April 2020 as it had to close all its stores by March 22.

The group resumed operations of some of its outlets in April, although the stores were permitted to operate for a limited number of hours in accordance with requirements by the authorities. Its operations have fully resumed by May 31, amid the implementation of the Conditional Movement Control Order (CMCO).

Findings from above study

Most companies at certain stage would choose to go public rather than staying private and list themselves on a stock exchange. There are many benefits of listing of stocks on a stock exchange

1. The major benefits of doing is raising large amount of funds for investment purposes.
2. You can raise funds being private as well but once you go public and the company financial records are available to all then raising large amount of funds at cheaper cost becomes easy if the company has great prospect.
3. Once you list your stock on the exchange then the liquidity in the stock would increase significantly, high liquidity makes the stock attractive to investors.
4. If the initial founders of the company want to sell some of their stock, then they can do so very easily when the stock is listed and one of the main reasons for the stock going public is some initial investors and owners would want to cash out their stocks.
5. The stock valuation also becomes very easy and the valuation provided by the market for the stock during a time period when there is not too much volatility is very close to its intrinsic value so valuation becomes the easy part, valuing a private company is more difficult compared to a publicly listed company.
6. These are some of the reasons (mainly access to large capitals, easy valuations & high liquidity and entry & exit) as to why most companies at certain stage choose to go public rather than remaining private.

Need Comments of the findings thats based on the above study. Pleace dont copy paste from other chegg answers. Thanks in advance