Redington waits on outcome of share issue

Redington will take one step closer to becoming one of the few publicly-quoted distributors operating in the region when its long-awaited share issue closes tomorrow. The outcome of the IPO — which kicked off earlier this week — remains crucial to its long-term ambitions with the company set to use a significant chunk of the funds to strengthen its logistics capabilities in the Middle East and Africa.

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By  Andrew Seymour Published  January 24, 2007

Redington will take one step closer to becoming one of the few publicly-quoted distributors operating in the region when its long-awaited share issue closes tomorrow. The outcome of the IPO — which kicked off earlier this week — remains crucial to Redington’s long-term ambitions with the company set to use a significant chunk of the funds to strengthen its logistics capabilities in the Middle East and Africa. M. Muthukumarasamy, compliance officer at Redington, confirmed to Channel Middle East that the company — which will be listed on both the Bombay Exchange and Mumbai’s National Stock Exchange — hoped to raise US$35m from the offering. He said the distributor had issued 13.2 million shares in the price band of US$2.14 to US$2.55 with a minimum application for 60 shares. As revealed by Channel Middle East in October, the funds from the IPO will go towards constructing state-of-the-art automated distribution centres (ADCs) in the Middle East and India. That will include a large Jebel-Ali based facility to address all of its supply chain and warehouse needs in the Middle East and Africa region. The centre is expected to contain features such as advanced bar coding and shipment tracking technology in a bid to ensure the company maintains its position as the largest IT distributor in the Middle East. Mathew Thomas, vertical head for IT distribution at Redington Middle East and Africa, says the company is confident of selecting a location somewhere in the Jebel Ali Free Zone within the next three months. “We are looking at the prospects at the moment,” he revealed. “There are two options — we can either take land and build our own facility or there are a few properties which are already built and ready to be sold. We are looking at those to see if they could be modified to our needs. Our key priority is warehouse alignment and space. Hopefully before our new financial year on April 1st we will have made a decision.” In addition to the automated distribution centre, Redington will also celebrate its elevation to publicly-listed status by financing an SAP ERP system that is currently being rolled out among its nine Middle East subsidiaries. “These [subsidiaries] are currently functioning independently so this will bring them all under one umbrella,” explained Thomas. R. Srinivasan, managing director at Redington, revealed earlier this month that around US$9m of the funds it raises from the IPO will find its way to the company’s Gulf operation to pay for the new distribution centre and back-office investments. He was also quoted as saying that the firm plans to build another 25 service centres in India and set up a local repair facility for LCD panels. According to Srinivasan, Redington’s annual sales now stand at a massive US$1.5bn with half of that figure originating from the Indian market. The rest comes from its ‘international’ operations, which include the Middle East, Africa and Singapore.

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