KUALA LUMPUR (Sept 13): UUE Holdings Bhd, which provides underground utilities engineering solutions, is planning an initial public offering (IPO) on the ACE Market of Bursa Malaysia to raise funds to buy machinery and equipment, and for working capital.

The exercise involves a public issue of 124.9 million new shares, of which 30.42 million shares will be for the Malaysian public, while 40.59 million shares will be set aside for its eligible directors employees and those who have contributed to the group's success, according to its draft prospectus on Bursa Malaysia.

The balance 53.89 million shares will be placed out to selected investors — including 38.57 million shares to Bumiputera investors approved by the Ministry of Investment, Trade and Industry (Miti).

Its planned IPO will also include an offer for sale of 37.46 million existing shares by way of placement to Bumiputera investors approved by Miti.

This brings the IPO size to 162.36 million shares or 26.7% of its enlarged share capital of 608.29 million shares.

Besides its primary underground utilities engineering solutions, such as horizontal directional drilling, open cut and micro trenching, it is also involved in the manufacturing and trading of high-density polyethylene (HDPE) pipes.

The group made a profit after tax (PAT) of RM14.12 million for its financial year ended Feb 28, 2023 (FY2023) on a revenue of RM88.66 million, a slight dip from the RM14.57 million it made in FY2022, when revenue was at RM74.89 million. The group's PAT was at RM7.37 million in FY2021, when the topline was at RM51.71 million.

Its primary business segment contributed 89.9% or RM79.72 million of FY2023 revenue, while the manufacturing and trading of HDPE pipes brought in 10.1% (RM8.94 million).

The group is active in both Malaysia and Singapore, with the local market contributing 74.2% or RM65.77 million of its revenue in FY2023, when Singapore brought in RM22.89 million that year.

The company presently does not have any formal dividend policy but intends to pay dividends to shareholders in the future, though it depends on its financial performance, as well as factors such as capital expenditure requirements and general financial condition.

The group is 69.4% controlled by its managing director and largest shareholder Datuk Dr Ting Kok Hwa, who will pare his stake down to 50.9% post-IPO. Other shareholders are its executive directors Hin Wai Mun and Chong Tuoo Choi, who plan to trim their stakes from 11.2% and 9.4% respectively, to 8.2% and 6.9%. Another 10% are currently held Kok Hwa's sibling, Ting Meng Pheng, whose stake will drop to 7.3% after the listing.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the proposed IPO.