OneAll International will raise only $2.5 million through its initial public offering in a deliberately unusual strategy to convince investors it can be trusted.
The premium outdoor furniture company designs and makes its products in China, sells worldwide and has a predicted market capitalisation of $118.5 million when it lists on the Australian Securities Exchange on October 22.
But its executives have chosen the smallest possible launch to dispel investor concerns about backing a Chinese company.
"Too many dodgy Chinese companies have come to the ASX, raised money and disappeared back overseas. OneAll is nothing like those groups. In fact, it will be the opposite," investment lead James Tong, executive chairman of Secvest Capital, said.
Mr Tong, who worked previously for BNP Paribas as head of equities for Australia and New Zealand, said the company was committed to a multistage listing process to build confidence.
"We want to show this is different. OneAll is an international company and they will put themselves under the spotlight, grow and then once the market is confident in them, raise to grow their business to the next level."
The 15-year-old company designs, manufactures and supplies furniture to more than 120 clients in Europe, Asia and Australia. It is listing to raise the capital over several years to acquire shops so it can control the pipeline and take profit from end to end in the process.
List carefully and raise slowly
But that substantial raise is more than 18 months away, as the company prepares to list carefully and raise slowly. It will pay its first dividend, an estimated 4¢ a share, in December.
The company can afford to take its time. It has no outstanding debt, and revenue increased by 25 per cent in 2014. It earned $36.4 million in revenue in 2014 and is forecast to earn $23.3 million in 2015 as it continues to expand its manufacturing facilities.
"We have sufficient cash flows to maintain and grow the company, but want to grow faster," joint chief executive Roger Cao said.
Mr Cao and fellow joint chief executive Douts Li are permanent residents in Australia.
Mr Tong said one of the biggest challenges of the slow raising process was managing considerable institutional demand.
"Most are asking for $2 million in shares, but we need enough shareholders, so the most we can offer is $5000."
If the company raises the minimum subscription of $1 million, all funds raised will go towards covering the costs of the offer. If it raises the maximum amount of $2.5 million, slightly more than half will go towards covering the costs of the offer and the remaining, about $1.2 million, will go towards general working capital.
The company intends to raise tens of millions about a year to 18 months after the IPO by issuing more shares. Until then, the existing shareholders will own between 97.9 and 99.2 per cent of the equity, making it possible to pass easily any shareholder resolution.
OneAll International will join the ASX on October 22, with a starting share price of $1.
