TAIWANESE firm Cal-Comp Technology (Philippines) Inc. said it will make the Philippines its next main manufacturing hub in Southeast Asia and will beef up its existing operations in the country using proceeds of its P6.77-billion initial public offering (IPO).
Simon Shen, CEO of New Kinpo Group (NKG), said they decided to increase the capacity in the country as it shifts the focus of its research and development (R&D) operations in China.
“China will move toward higher level R&D, so its manufacturing component will slowly be transitioned to the Philippines. This IPO will allow us to raise the funds needed to support this transition and help the Philippines enhance its manufacturing and R&D strengths,” Shen said.
NKG is the parent company of Cal-Comp.
Cal-Comp has earmarked P1.88 billion from the IPO proceeds for the construction and development of Phases 2 and 4 of its First Philippine Industrial Park Inc. (FPIP) manufacturing complex in Santo Tomas, Batangas, where its subsidiary Kinpo Electronics (Philippines) Inc. is also located. This will add approximately 48,000 square meters (sq m) of space for manufacturing.
There will be additional facilities that will also be built inside its Lima Technology Center site in Lipa, Batangas.
Cal-Comp Technology is also targeting to enter into additional land leases within FPIP that will cover a land area of approximately 300,000 sq m to increase its manufacturing capacity. Approximately P1.26 billion of the proceeds will be allocated for this purpose.
This facility expansion will require the acquisition of P844 million worth of new assembly equipment and machinery, as well as the upgrade of existing equipment that will increase production capacity. These acquisitions will include surface- mount technology and assembly lines for storage, home appliance and calculator products.
It will invest P800 million on R&D for the introduction of new products expected to come out in the next four to five years.
Another P243.7 million of the proceeds will be used for other capital-expenditure requirements, which include the purchase of miscellaneous equipment and computer software required for Cal-Comp Technology’s production operations.
Meanwhile, P900 million will be used to repay its unit’s short-term loans with Metrobank and Cathay United Bank which provided additional working capital.
“We are ramping up investments in the Philippines because we believe in the country’s economic potential. With an increasingly tech-grounded world, we intend to expand Filipinos’ access to technologically-advanced products, equipment and training,” Shen said.
Cal-Comp, popularly known to manufacture hard-disc drives, said in its registration statement it hopes to sell 397.96 million primary common shares with an over-allotment option at an indicative price of P17 apiece. This amount of shares is equivalent to 26.77 percent of the company’s total issued shares to the public.
The company targets to list before the end of the year.
It is also set to launch its own-branded products to the Philippine market within the year.