UNDERGROUND utilities and substation engineering specialist MN Holdings Bhd (MNHB) expects to raise RM17.2 mil under its listing on the ACE Market of Bursa Malaysia to undertake business expansion.
The company plans to use RM5.84 mil (34%) raised from its initial public offering (IPO) exercise to purchase various machineries and equipment over the next two years to support its business expansion for the underground utilities, and substation engineering services and solutions segments.
The acquisition of these machineries and equipment will allow MNHB to scale up its resources and project capabilities to undertake projects that require different scale and complexities.
A further RM4.33 mil (25.2%) of the proceeds will be used for general working capital to support working capital requirements for new and existing projects.
MNHB’s managing director Loy Siong Hay expects MNHB’s working capital requirements to increase in line with the growth in its business operations.
“Currently, our group finances general working capital through a combination of internally generated funds and external financing such as bank borrowings,” he pointed out. “The allocation of proceeds for our general working capital requirements will reduce our dependency on external financing and allow us to undertake more projects concurrently.”
The remainder of the proceeds will be used for the repayment of bank borrowings amounting to RM4 mil (23.3%) and RM3 mil (17.5%) for estimated listing expenses.
Currently, MNHB has an order book circa RM172.2 mil as of March 9 comprising RM135.4 mil from underground utilities engineering services and solutions segment, and RM36.8 mil from substation engineering services and solutions segment.
“This order book will be recognised progressively over the next one to four financial years based on the expected progress of each project,” projected Loy.
MNHB is the exclusive partner to TNB-approved main contractors Rentak Segar Sdn Bhd and Impiana Mahir Sdn Bhd for underground utilities engineering services and solutions projects.
As of March 9, MNHB has completed 375 contracts with a cumulative value of RM261 mil in the underground utilities and substation engineering services and solutions segments.
Under its listing exercise, MNHB is issuing 81.75 million new shares which represent about 20% of its enlarged share capital at an issue price of 21 sen/share. Of the 81.75 million new shares, 20.44 million new shares (5%) will be made available to the Malaysian public via balloting.
Another 8.18 million new shares (2%) are intended for eligible directors and employees under pink form allocations while 51.09 million new shares (12.5%) are reserved for private placement to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI) and the remaining 2.04 million new shares (0.5%) will be placed out to selected investors.
As part of its listing exercise, the existing shareholders of the company will also make an offer for sale of 40.88 million shares to selected investors by way of private placement.
Based on its enlarged share capital of 408.75 million shares, MNHB is expected to have a market capitalisation of RM85.84 mil.
The IPO is open for subscription from today until April 15 while MNHB’s listing is slated for April 28. M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise. – April 8, 2022
