Chi Kan Set for Hong Kong IPO Thursday

If the formwork contractor prices in the mid-range of HK58 cents per share, it would bring in proceeds of around HK$107 million ($13.80 million).

Author: Anthony Russo   

The formwork contractor Chi Kan Holdings Ltd. announced Wednesday the planned details for its Hong Kong IPO set to commence tomorrow.

The company intends to offer a total of 250 million shares in the range of HK52 and HK64 cents per share each, Chi Kan said in a statement today. According to the company, if it prices in the mid-range at HK58 cents per share, it would bring in proceeds of around HK$107 million ($13.80 million). Among the shares, 90% or 225 million will be for placing, while 25 million or 10% will be for the public offer.

Chi Kan plans to use 85% of the proceeds from the IPO to fund upfront costs of newly awarded and tendered projects and 15% for the expansion of its workforce and general working capital.

"Since substantial working capital investment is often required for making prepayment or deposits to suppliers and subcontractors, the Group may experience net cash outflows at the initial stage of a project after commencement," Chi Kan said in a statement today.

Operating for more than 20 years, Chi Kan claims it was the second-largest in Hong Kong's formwork services market in terms of revenue for the full year 2020, holding roughly 11% of the market share. Most of Chi Kan's customers are firms with Hong Kong listings or their subsidiaries. It has recruited approximately 700 formwork workers to keep up customer demand.  

The lone sponsor on the offering is Ample Capital Ltd., while Alpha Financial Group and Forwin Securities Group are the Joint Global Coordinators.
The IPO will commence Thursday and last through Aug. 4. The pricing will be announced on Aug. 13 with Chi Kan set to start on the next day under the stock code "9913."