This article first appeared in The Edge Financial Daily on January 17, 2019 - January 23, 2019

KUALA LUMPUR: UWC Bhd, an integrated engineering supporting services provider, is looking to get listed on the Main Market of Bursa Malaysia and plans to use proceeds of its proposed initial public offering (IPO) to acquire new machines to boost its production capacity.

UWC is mainly involved in the provision of precision sheet metal fabrication and value-added assembly services, and the fabrication of precision machined components.

According to its draft prospectus posted on the Securities Commission Malaysia’s website, the IPO involves a public issue of 70 million new shares or 19.1% of the group’s enlarged issued share capital of 366.8 million shares upon listing, and an offer for sale of 33.02 million shares — representing 9% of the enlarged share capital — by way of private placement to selected investors.

Of the 70 million public issue shares, 20 million shares (5.5% of the enlarged issued capital) will be made available for application by the Malaysian public; three million shares (0.8%) for application by eligible directors and employees; and 47 million (12.8%) by way of private placement to institutional and selected investors.

The issue price of the IPO has yet to be fixed. At present, UWC has an issued share capital of 296.8 million shares worth RM59.36 million.

Of the proceeds raised from the IPO, 47.8% will be used to purchase new Computer Numerical Control (CNC) machines, while 8.2% will be used to buy industrial robotic arms and material handling system; 31.3% will be for repaying bank borrowings, while the remainder will be for working capital (5%) and estimated listing expenses (7.7%).

For the financial year ended Dec 31, 2018 (FY18), UWC registered a net profit of RM31.22 million, 110.08% higher compared with RM14.86 million in FY17, while revenue grew 48.11% to RM136.5 million from RM92.16 million.

Hong Leong Investment Bank is the principal adviser, underwriter and placement agent for the IPO.