KUALA LUMPUR (Nov 27): Mechanical, electrical and process utilities (MEP) engineering company Critical Holdings Bhd, which is set to debut on the ACE Market on Dec 18, has set its initial public offering (IPO) price at 35 sen per share, to raise RM39.03 million under the listing exercise.
At 35 sen per share, Critical Holdings is expected to have a market capitalisation of RM130 million after listing, valuing the company at about 13.57 times based on its net profit of RM9.59 million for the financial year ended June 30, 2023 (FY2023).
At its prospectus launch on Monday, the group said RM26.02 million of the proceeds will be raised from the issuance of 74.35 million new shares, representing 20% of its enlarged share capital of 371.74 million shares.
Of the 74.35 million new shares, 18.59 million new shares will be made available to the Malaysian public via balloting, followed by 3.72 million new shares for its eligible directors and employees.
Another 46.47 million for placement to identified Bumiputera investors, while the remaining 5.58 million new shares are earmarked for placement to selected investors.
The IPO includes an offer for sale of 37.17 million existing shares by Critical Holdings shareholders to selected investors, by way of private placement.
Critical Holdings and its group of subsidiaries provide MEP engineering solutions and MEP maintenance and services for critical facilities, namely, plantrooms, cleanrooms and data centres.
The end user markets it serves are the semiconductor, pharmaceutical, and solar photovoltaic panel manufacturing sectors, as well as data centre, co-location services, telecommunications, hotel, and medical facilities sectors.
The proceeds raised from the IPO will enable the group to cater for the next phase of its business expansion.
Of the proceeds to be raised from the public issuance of shares, Critical Holdings has earmarked RM6 million for the acquisition of the new regional office in the Klang Valley and RM4.5 million for the expansion of its workforce.
Another RM1.6 million will be for capital expenditure and RM9.92 million will be channelled towards working capital.
The remaining proceeds of RM4 million will be for listing-related expenses.
The group has set a dividend policy and targets to declare a yearly dividend of up to 25% of its profit after tax to reward its shareholders.
At the press conference after the IPO prospectus launch, Critical Holdings non-independent executive director and chief executive officer Tan Si Lim said the group anticipates more clean rooms to build, based on the indication from its clients on anticipating the recovery in the semiconductor sector next year.
Meanwhile, Tan said the group will gear up to grow its data centre segment — a subset of its MEP engineering solution business, the group’s largest revenue contributor with 91.49% of FY2023’s total revenue of RM150.94 million.
Apart from data centre, plantrooms and cleanrooms are under the MEP engineering solution business. Plantrooms contributed a revenue of RM94.58 million, followed by cleanrooms with RM30.49 million, and data centres at RM13.01 million.
Tan said the group’s diversified capabilities allow it to handle multi-disciplinary projects across various sectors, reflected in its impressive order book of RM264.53 million, signalling sustained growth between FY2024 and FY2027.
Simultaneously, the group is actively tendering for 23 projects with a contract value of RM253.04 million, predominantly related to plant rooms, solidifying its role as a key subcontractor.
“Our commitment to quality, timeliness, and cost-efficiency is evident, with MEP engineering solutions contributing 91.49%, and MEP maintenance and services contributing 8.51% to our revenue in FY2023,” Tan added.
The public issue portion of the IPO will be made available starting Monday, and will close on Dec 5, 2023.
MIDF Investment is the underwriter, principal adviser, sponsor and placement agent for the IPO exercise.