Advancecon to raise RM56.7m from IPO

KUALA LUMPUR: Earthworks and civil engineering services specialist Advancecon Holdings Bhd, which is slated for listing on the Main Market of Bursa Malaysia on July 10, is looking to raise RM56.7 million from its initial public offering (IPO) exercise.
The IPO exercise entails the public issue of 90 million new shares at an issue price of 63 sen per share, representing 22.4% of the group’s enlarged share capital.
From the new shares, 37 million shares will be allocated for private placement to institutional and identified investors and 18 million shares for private placement to identified bumiputra investors approved by the Ministry of International Trade and Industry (Miti). The remaining five million shares are offered to the group’s eligible directors and employees and 30 million shares for application by way of balloting for the public.
There will also be an offer-for-sale of 33 million existing shares allocated for private placement to identified bumiputra investors approved by Miti.
Among the substantial shareholders of Advancecon are its group CEO Datuk Phum Ang Kia (34.1%), deputy CEO Lim Swee Chai (18.3%), Phum’s brother Pham Soon Kok (10.5%) and COO Yeo An Thai (5.3%). According to its draft prospectus, Pham is not an employee of the group and does not hold any executive position within the group.
Proceeds raised from the IPO exercise will be used for capital expenditure (RM29.7 million), repayment of bank borrowings (RM12.5 million), working capital (RM10.7 million) and listing expenses (RM3.8 million).
Speaking at the prospectus launch yesterday, Advancecon chairman Yeoh Chong Keat said the group’s RM29.7 million capex includes the purchase of new and higher-capacity construction machinery and equipment, as well as construction of a new workshop to carry out in-house repairs and maintenance services for the machinery and equipment.
Yeoh said the group recently secured two earthworks and infrastructure contracts worth RM345 million for the West Coast Expressway and Pan Borneo Highway projects, which are expected to take 30 months to complete.
“We are therefore optimistic of attaining more large-scale contracts going forward by leveraging on our enlarged balance sheet after the IPO,” he added.
As at May 19, 2017, Yeoh said the group has a strong order book of RM572.5 million that will keep it busy for the next two years.
COO Yeo said this year, the group has tendered for more than 20 projects worth RM496.4 million, which are mostly for national projects, and is hoping to secure more projects going forward.
He said the group is optimistic of its performance in the current financial year ending Dec 31, 2017 and expects to maintain the profit margin of between 10% and 12% it has registered for the last three years.
Applications for the group’s IPO opened yesterday and will close on June 28, 2017. The group has appointed RHB Investment Bank Bhd as its principal adviser, underwriter and placement agent for the IPO exercise.