IN 2008, KNM Group Bhd made a significant move by acquiring a 100% cent equity interest in Borsig GmbH for €350 mil. This strategic acquisition brought Borsig, a renowned German machinery and equipment company, into the KNM’s portfolio.
Fast forward to today, Borsig continues to shine as a valuable asset within KNM with an attractive market valuation exceeding €300 mil (RM1.5 bil).
Its market valuation remains impressive, making it a crown jewel in the conglomerate’s holdings. However, KNM’s current market capitalisation at approximately RM445 mil reflects a considerable gap compared to the robust value of Borsig.
Despite formidable challenges, including the COVID-19 pandemic and disruptions caused by the Ukraine war, Borsig’s production remained unblemished, demonstrating remarkable resilience and financial stability.
However, the recent developments surrounding KNM have brought renewed attention to Borsig’s significance.
KNM Group’s CEO and managing director Ravindrasingham Balasingham has highlighted the undervaluation of the conglomerate’s shares and referred to Borsig as a prime asset deserving of recognition. He emphasised that Borsig’s value is a testament to the potential within the conglomerate.
With an eye on maximising the value of Borsig, KNM Group is now looking toward an initial public offering (IPO) on the Singapore Exchange (SGX) for the German machinery and equipment manufacturer.
This strategic move aims to unlock the full potential of Borsig, offering it an opportunity to thrive in the market while aiding KNM in its debt re-payment efforts.
If outcome of the upcoming extraordinary general meeting (EGM) on Oct 16 (Monday) be in favour of the current management of KNM, it has the potential to not only enhance the value of Borsig through its IPO but also uplift the entire KNM Group.
IPO option is the most viable
Borsig has been recognised as the most valuable asset within KNM. Currently, KNM is grappling with significant financial losses that have been accrued, compiled and consolidated by the previous management of KNM. The current management has inherited this challenging legacy.
As a result, they have determined that selling Borsig or a partial sale of Borsig is the most viable course of action. The proceeds from this sale will be used to settle the creditors of KNM.
The current management should be commended for having a contingency plan (Plan B) which was lacking in previous situations. It is important to avoid past challenges, by making the IPO path the chosen way forward.
The IPO track will enable Borsig to achieve significant growth in the future, both through organic expansion and especially, through external development. We will have the ability to augment our product portfolio and acquire companies to expand our business.
This represents a fantastic opportunity for Borsig. The IPO phase is the perfect avenue for our growth. Moreover, it’s not just about growth; it’s also about improving our footprint in Asia.
We plan to expand our business further in Asia by establishing local and regional engineering or production partnerships or facilities.
We appreciate the deep trust, professionalism and leadership demonstrated by KNM’s current management under the guidance of its chairman Tunku Datuk Yaacob Kyra.
His steadfast leadership has earned stakeholders’ trust and is warmly welcomed by financial partners and premium investors, making the journey towards IPO highly anticipated and promising. – Oct 11, 2023
Jurgen Stegger is German machinery and equipment manufacturer Borsig GmbH’s CEO.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
