UNZA re-launches IPO

South East AsiaÆs largest independent personal care products producer hopes to take advantage of strong demand for Asian consumer plays.
Singapore-based UNZA Holdings has relaunched a S$38.4 million ($23.6 million) IPO almost three months after scrapping plans to list on the Singapore Stock Exchange (SGX) because it thought market conditions were not good enough.

The CLSA led deal will now open today (February 15) and close on February 21. It has been priced at S$0.35 per share and will comprise a base deal of 109.9 million shares, with a 10.9 million greenshoe.
The deal has a split, which will see 95% placed with institutions and 5% with retail. UNZA management and staff will account for a further 7.5% that will come out of the institutional book. Post-greenshoe, the company will have a freefloat of just over 27%.

Pre-IPO, private equity firm Actis-UHPL and Standard Chartered Private Equity each owned 27.6%. UNZA management was the single largest shareholder with a 36% stake. Post-IPO, both Actis and Standard Private Capital will see their respective holdings drop to 22% each.

Observers say the deal has been priced at 10.8 times 2005 earnings based on a net profit figure of S$10.56 million ($6.5 million) for the 2005 Financial Year ended April 30. They argue this is cheap compared to comparables such as KoreaÆs Amorepacific, which is currently trading at 15.5 times 2006 earnings, or Indian comps such as Colgate and Hindustan Lever, which are respectively trading at 21.1 times and 30 times.

Investors are said to be attracted to the company because of its competitive edge manufacturing personal care products sensitive to Asian sensibilities. For example, the company is currently laying plans to sell halal-designed products in Malaysia and Indonesia, where it has a top three market share position.

The company says that 68% of the IPO proceeds will be used to pay down debt, while 21.5% will fund its July 2005 acquisition of 30% of UNZA Indochina in Vietnam from EAC Nutrition. The remaining proceeds will be used to expand the companyÆs manufacturing facilities in China and purchase equipment and machinery for its Malaysian and Vietnamese operations.

Established in Malaysia in 1979, UNZA has since built up a portfolio of 48 brands, which are sold in 38 countries via 58,000 outlets. In 1987, the company was acquired by BP Singapore, only to be bought out by management in 1992 and listed on Bursa Malaysia in 1994.

In 2004 it was taken private again.

About 80% of sales derive from personal care products, which include brands such as Enchanteur, Eversoft, and the halal-based cosmetics SAFI. As of April 2005, Singapore/Malaysia accounted for 63% of sales, while growth markets such as Indochina, and Hong Kong/China accounted for 16% and 15% respectively. Indonesia comprises of a smaller stake of total revenue but with the rollout of products such as SAFI and other brands to the market, observers state that the country will soon account for around 12% of total group revenues.
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