PETALING JAYA: TCS Group Holdings Bhd aims to raise an estimated RM20.7 million from its proposed initial public offering (IPO) on Bursa Malaysia’s ACE Market.

According to the building and infrastructure construction services provider group’s prospectus, the IPO entails a public issuance of 90 million new shares, representing 25% of the group’s enlarged share capital, alongside the offer sale of up to 18 million of existing shares at an issue price of 23 sen per share.

The group’s managing director Datuk Tee Chai Seng stated that he is confident that the listing exercise will allow it to further strengthen its foothold in the construction industry, as it enables TCS to gain access into the capital markets to fuel its expansion plans.

“Going forward, we have plans to further strengthen our presence in the high rise, purpose-built and institutional buildings segments, backed by our established track record in building construction projects,” he said in a press release.

“In addition, we will also broaden our revenue stream by venturing into infrastructure construction services to include major roads, highways and bridges.”

The group’s revenue increased from RM103.6 million in the financial year ended Dec 31, 2016 to RM358.4 million in FY2019, representing a three-year compounded annual growth rate of 51.2%.

Profit after tax meanwhile, increased from RM5.1 million in FY2016 to RM15.7 million in FY2019, growing at a 3-year CAGR of 45.4%.

Tee opined that the long term prospects of the construction industry remain promising, notwithstanding the near-term challenges brought about by the Covid-19 pandemic.

He observed that with the reopening of the economy in May has led to resumption of construction activities and that the various initiatives by the government, coupled with the low interest rate is expected to reinvigorate the property sector.

TCS revealed under the public issuance, 10.8 million shares will be made available to the Malaysian public, 7.2 million of the issue shares has been allocated for its eligible directors and employees, 32.4 million shares will be placed to institutional and selected investors, while the remaining 39.6 million shares will be placed out to identified bumiputra investors.

Following the listing, the group will have a market capitalisation of RM82.8 million based on the issue price of 23 sen and its enlarged share capital of 360 million shares.

For the IPO exercise, RHB Investment Bank is its sole principal adviser, sponsor, sole underwriter and sole placement agent.