KUALA LUMPUR (March 29): Northeast Group Bhd, a precision components manufacturer, on Friday filed for an initial public offering (IPO) on Bursa Malaysia’s ACE Market to raise funds for expansion, including on a new factory costing over RM50 million.
The IPO involves a public issue of 168.99 million new shares and offer for sale of 51.8 million existing shares, according to its draft prospectus posted to Bursa Malaysia. All in all, the listing would offer investors up to a 30% stake in the company.
Northeast, based in Penang, mainly manufactures precision engineering components used in the photonics, electrical and electronics, semiconductor, telecommunication and optoelectronics industries for both local and foreign clients including from the US, the UK, Thailand, Singapore, Canada, and Germany.
Further, the company also provides surface finishing, sheet metal fabrication and mechanical sub-assembly. Northeast recorded a profit after tax of RM18.36 million on a revenue of RM93.34 million for the financial year ended Sept 30, 2023.
Out of the 168.99 million new shares, the company is allocating 37 million to the public, 29.6 million for eligible persons, and 102.38 million to select investors and Bumiputera through private placement. The sale of existing shares meanwhile will also be done through private placement for Bumiputera investors.
Proceeds from the new share sale will be used to finance construction of a new factory in Penang with production floor space totalling 79,020 sq ft. Northeast also plans to purchase new computer numerical control machines, or CNC machines, which will raise its operating capacity by 8.5-25%.
Northeast has also earmarked some of the proceeds as working capital, repaying bank borrowings, and to defray estimated listing expenses.
Meanwhile, any money raised from the offer-for-sale will accrue entirely to selling shareholders including managing director Ng Chay Chin and his brother and senior operations director Ng Chai Hee.
Affin Hwang Investment Bank is the principal adviser, sponsor, sole placement agent and sole underwriter for the IPO.