SOLAR photovoltaic (PV) and earthing & lightning protection (ELP) specialist Pekat Group Bhd which in en route to a listing on the ACE Market of Bursa Malaysia expects to raise RM44.4 mil from its initial public offering (IPO) exercise.
The company plans to use RM18 mil (40.6%) from the money raised for the construction of new head office and operational facilities as the group expands its operations to take advantage of the upcoming growth in the solar PV industry.
Boasting a total built-up area of 114,252 sq ft, the new head office which is expected to be operational by December 2023 will serve as an integrated facility that showcases Pekat’s solar PV business as well as its integrated management, monitoring and assessment platform.
The company will further utilise RM12.7 mil (28.6%) for working capital requirements, particularly for the purchase of materials for its projects such as solar PV modules, solar PV inverters and ELP products and accessories; RM10 mil (22.5%) to repay bank borrowings while the remaining RM3.7 mil (8.3%) will be used to defray listing expenses for the IPO.
Pekat managing director Chin Soo Mau said the increase in working capital will facilitate the company’s capability to secure more contracts, carry out more projects concurrently and provide more maintenance services.
“Some of the solar PV and ELP projects that we are involved in require tender bonds and performance bonds which is normally a fixed sum that varies from tender to tender,” he justified.
“This results in the lock-up of a portion of our capital during the duration of the project, thereby affecting our liquidity for that duration.”
As such, the allocation to working capital is expected to enhance Pekat’s liquidity and cash flows so that the company will be in a stronger position to secure and complete more projects moving forward.
Under its IPO, Pekat is issuing 138.7 million new shares that represent 21.5% of the company’s enlarged share capital at an issue price of.32 sen per share.
Of the 138.7 million new shares, 32.2 million new shares (5.0%) will be made available to the Malaysian public via balloting; eligible directors and employees who have contributed to the success of Pekat (16.1 million new shares or 2.5%) while the remaining 90.3 million new shares (14.0%) will be placed out to selected Bumiputera investors approved by Ministry of International Trade and Industry Malaysia.
Additionally, Pekat will also make an offer for sale of 32.2 million shares to selected investors by way of private placement. Based on the enlarged share capital of 645.0 million shares, Pekat is expected to have a market capitalisation of RM206.4 mil.
The IPO is open for subscription from today (June 2) to 10. Pekat’s listing on the ACE Market is tentatively scheduled on June 23.
The company’s substantial shareholders include Chin, Tai Yee Chee (executive director), Wee Chek Aik (executive director) and Hextar Holdings Sdn Bhd (which is also a major shareholder of Main Market-listed Hextar Global Bhd).
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise. – June 2, 2021
