JSE-listed IT company Mustek plans to list some of its stock on the Taiwan Stock Exchange at the end of the year to raise capital for funding research and development and the company`s African expansion drive.
Director Mike Hennessy says Mustek wanted to align itself with a market that understood its business model and recognised the value of the company.
The first tranche of 10 million Taiwanese Depository Receipts (TDRs) will be issued by sponsoring broker and underwriter Overseas Credit & Securities, based in Taiwan. No capital will be raised on the South African market.
"Essentially we are a trading company, with stock and debtors; yet the market expectation locally is that IT companies should not be geared," says Hennessy.
"We have chosen the TDR route over a further rights issue because we believe the value of the Mustek share will be realised more readily in the Taiwanese market."
Group financial manager Hein Engelbrecht says that "Taiwanese investors tend to place a higher premium on the value of shares issued by technology manufacturing and assembly companies such as Mustek, and for that reason we will issue TDRs, which we expect will be traded at a premium."
Hennessy adds that the application is subject to regulatory approval - including that of the Taiwanese and South African reserve banks, the JSE and Taiwanese exchange as well as shareholder approval.
"The issue will give us more exposure internationally, with a concomitant enhancement of our products and services."
The TDR issue is the first capital-raising exercise by the company.
"When we listed in 1997 we raised no capital," says Engelbrecht. "Over the last three years we have increased our earnings by more than 40% annually. If we are to continue with our expansion plans, it is to be expected that Mustek will look to raising capital through a share issue."
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