Nineteen months after its listing on the Hong Kong stock exchange, Malaysia-based Nirvana Asia Ltd received an offer from an established private equity (PE) firm, CVC Capital Partners, to buy out the former at a value of HK$3 a share, which was the same price of the company when it listed there.
On July 8, CVC made a HK$8.1bil (RM4.16bil) buyout offer, which will be paid in cash and shares.
According to the offer, CVC is offering cash and shares to founder Rightitan Sdn Bhd, which owns 42.7% of Nirvana, and Orchid Asia Group Management, which holds a 21.6% stake. For the other shareholder, the offer will be in cash of HK$3 a share.
The offer price of HK$3 per share is a premium of 22.4% over Nirvana’s last traded price.
Nirvana, which has its main operation in Malaysia, was listed on the Hong Kong Exchange in December 2014 at HK$3 a share, raising HK$2.02bil (RM1.04bil).
Its share price fell about 35% to HK$1.93 a share on its listing day. Since listing, the shares have historically traded at a discount to the initial public offering (IPO) price of HK$3 per share.
The shares of Nirvana would be delisted after the completion of the buyout offer, it said in a filing with the Hong Kong Exchange.
Nirvana’s biggest revenue stream, almost 40%, comes from niches, which families use to store funeral urns.
The firm’s operation in Malaysia contributes about 80% of its revenue. Founded in 1990, Nirvana also sells burial plots and develops cemeteries, catered to Taoists and Buddhists.
Nirvana runs 10 cemeteries, 12 columbarium facilities as well as two funeral homes across Malaysia, Singapore and Indonesia.
In 2015, Nirvana’s profit rose by 21% to RM177.2mil from RM146.2mil in 2014. Revenue for the year rose 7.4% from a year earlier to RM504.4mil.
A majority of Nirvana’s IPO proceeds, about 40%, was allocated to acquire more land in Malaysian cities that it had not yet covered, as well as in Jakarta and Bangkok.
Meanwhile, it has put aside 25% of the proceeds for potential mergers and acquisitions in Malaysia, China and Indonesia.
It has also allocated 25% of its proceeds to expand the capacity of its existing cemeteries, columbarium facilities and funeral homes. The remaining 10% of the IPO proceeds will go toward working capital.