KUALA LUMPUR (Aug 30): Stationery maker Pelikan International Corp Bhd plans to raise funds by selling a 10% stake in the company to Ikhlas Capital Singapore Pte Ltd, a private equity (PE) firm partly owned by former banker Datuk Seri Nazir Razak.

Pelikan, in a stock exchange filing yesterday, said it plans to undertake a private placement of 54.8 million new shares at 39 sen each to Merit Plus Ventures Ltd, a company ultimately owned by Ikhlas Capital.

It will raise RM21.39 million from the exercise, which it plans to use for working capital, including market expansion, and repayment of borrowings.

Bursa Malaysia-listed Pelikan is an international manufacturer of quality paper, office and stationery supplies.

Ikhlas Capital is the Asean-focused PE fund in which Nazir is a partner, along with several other well-known figures, namely Kenny Kim (CIMB Group Holdings Bhd's former chief financial officer), Gita Irawan Wirjawan (Indonesia's former trade minister) and Cesar Purisima (the Philippines' former secretary of finance). The fund is understood to be Nazir's key focus since he retired as chairman of CIMB Group last October.

The Pelikan investment marks Ikhlas Capital's maiden deal.

"The new equity participation springboards Pelikan's plans to enhance its market participation in the Asia region, which now only comprises about 5% of its global turnover. The current plans of the group are to grow the under-represented markets such as those within the Asean region, as well as China, which have much higher growth potential given their population and economic growth relative to more mature markets in Europe," Pelikan said in a press release yesterday.

It said the group has in the past focused on the consolidation and streamlining of its global business — including the divestment of non-core businesses such as the printer consumables business and services business — which are now coming to a conclusion, hence enabling it to concentrate on its core stationary business division.

"It is now a good time to focus on growth plans and build a larger presence outside Europe, supported by its now four remaining plants," Pelikan said, adding that there is significant untapped potential in the region.

Getting Ikhlas Capital in as a shareholder is timely and fits with Pelikan's plan to increase revenue contribution from Asia. "Ikhlas' strategic guidance and strong relationships in the Asean region will help the group build effective distribution partnerships and penetrate large customer bases within its network," it said.

The private placement exercise is expected to be completed by the third quarter of this year. The issue price of 39 sen represents a premium of about 15.73% to Pelikan's five-day volume weighted average market price of 33.7 sen up to Aug 28, which was the last market day prior to the price-fixing date.

For the first-half ended June 30, 2019, Pelikan made a net profit of RM20.22 million, up slightly from RM19.16 million in the same period a year ago. This was on the back of lower revenue of RM534.12 million, compared with RM580.17 million before.

As at June 30, its bank borrowings (excluding lease liabilities) stood at about RM451.98 million. It plans to use RM10 million of the private placement proceeds to repay the debt.

It operates production sites in Germany, Mexico, Colombia and Poland. According to the group, its products are supplied to nearly every country in the world. It plans to launch new school stationery products in China in the last quarter of this year.