Union Gas Holdings to float on stock exchange

Union Gas Holdings, the Singapore-based fuel products provider, is holding an initial public offering in a bid to raise $5.72m.

The company is among the biggest suppliers of bottled liquefied petroleum gas cylinders for domestic use in the city-state, serving more than 140,000 households with over 100 delivery vehicles.

Known for its “Union” brand of bottled liquefied petroleum gas (LPG) cylinders – the company is offering 60 million shares at 25 cents apiece on the Singapore Stock Exchange (SGX). These comprise 30 million new shares and 30 million vendor shares.

Some 58.72 million shares will be placed with institutional investors, while the other 1.28 million shares will be made available to the public.

The shares represent 30 per cent of its enlarged share capital and are priced at 6.95 times of its pro forma earnings per share of 3.6 cents for the year ended Dec 31 last year.

Union Gas Holdings said about $4m of the funds raised will be used for business expansion through acquisitions of dealers for its retail LPG business. Another $1m will go to diversifying the company into the supply and retail of piped natural gas to customers in the services and manufacturing industries in Singapore.

Alexis Teo, Union’s chief executive, said: “We have observed a gradual attrition of smaller players in the retail LPG industry mainly due to increased operating costs, stricter regulations and higher customers’ expectations, and we think this will open the door for us to lead a consolidation of the retail LPG industry.”

The group reportedly delivered a 66.3 % jump in net profit from $2.4m in 2014 to about $4m last year. Gross margin rose from 18.4% to 32.5% over the same period.