Taxi cab operator Trans-cab Holdings has launched its Singapore initial public offering at the top of its targeted price range and aims to raise up to S$114.2 million ($91.3 million) in the process.
The issuer, the second-largest taxi operator in the Lion City, is offering 168 million shares, representing a quarter of the company's enlarged share capital.
Trans-cab had sought to price the shares at between S$0.65 and S$0.68 per share and received strong anchor demand during the bookbuild process, allowing it to price shares at the top this range and putting its market capitalisation at about S$456 million.
Supporting the DBS-led IPO are six cornerstone investors. Eastspring Investments, FIL Investment Management, Havenport Asset Management, JF Asset Management, Lion Global Investors and Maxi-Harvest Group collectively agreed to purchase 65 million shares, representing 38.7% of the total deal-size, according to a term sheet.
The institutional tranche makes up 94.2 million shares while the remaining 8.8 million will be allocated to retail investors in Singapore.
Of the shares on offer, some 153 million are primary. The remainder are being sold by chairman and chief executive Teo Kiang Ang and existing shareholder Goh Seow Chai, according to the company’s prospectus.
The public offer period opens on November 13 and will remain open until November 18.
At S$0.68 per share, the IPO values Trans-cab at 12.6 times 2013 earnings and 12.3 times expected 2014 earnings.
The company reported a net profit of S$18.2 million in the first half of 2014, compared with S$33 million in all of 2013. Revenues totaled S$90.8 million in the first six months of the year.
Trans-cab is the latest Southeast Asian taxi firm to float its shares this year, coming less than one month after Indonesian taxi company BlueBird raised $200 million in an IPO.
The timing for Trans-cab is better — Singapore’s Straits Times Index is now up 4% year-to-date after falling 6% from mid-September through mid-October as global equity markets roiled.
BlueBird initially sought to raise up to $300 million but lousy market conditions dampened sentiment and shrunk the deal size by $100 million. The Jakarta Stock Exchange fell 6% from mid-September up to the time of BlueBird’s IPO.
The company is also reportedly dealing with ongoing litigation, issues that shelved its first attempt at a public offering in 2013.
Similar to BlueBird, Trans-cab will use the IPO proceeds to boost its fleet. It will also diversify into other transportation businesses, improve technology, and construct a new headquarters in Singapore.
Trans-cab began its operations in 2003 with roughly 50 cabs. It now boasts a fleet of 4,686 taxis and as of June 30 had some 7,400 drivers working for the company.
It will also mull future acquisition opportunities, noting in its prospectus that rising standards on punctuality and higher fixed costs in Singapore make it difficult for smaller operators to expand and compete.
The largest taxi company in Singapore is Comfort, which operates over 16,000 cabs.