KUALA LUMPUR (April 9): Elridge Energy Holdings Bhd, which manufactures biomass fuel products, filed for an initial public offering on Bursa Malaysia’s ACE Market to raise funds for its expansion, including the construction of a new factory.

The IPO involves a public issue of 350 million new shares and an offer for sale of 350 million existing shares, according to a draft prospectus filed with Bursa Malaysia. All in all, the listing offers investors up to a 35% stake in the company at a price to be determined later.

“We intend to expand our production capacity in order to cater for orders from other new and existing customers,” Elridge said. The company currently operates out of a Port Klang factory, which has a capacity of 720,000 tonnes per year, but has hit utilisation rate of nearly 74% by end-2023, it noted.

The company plans to acquire a yet-to-be-identified land in Kuantan Pahang to build a 105,000-square-feet factory that will raise production capacity by 240,000 tonnes. The company has also earmarked proceeds from the IPO to buy equipment for its new factories in Kuantan as well as in Johor and Sabah.

The rest of the proceeds from the IPO will be used as working capital and to defray listing expenses.

Elridge, partly backed by listed electrical distribution equipment firm Mikro MSC Bhd, mainly manufactures and trades biomass fuel products, particularly palm kernel shell and wood pellets, used to generate heat or electricity.

Biomass products are typically a by-product or waste from renewable sources such as plants or organic waste.

Elridge’s net profit more than tripled to RM23.57 million on revenue of RM335.25 million in the financial year ended Dec 31, 2023, the prospectus showed. Gross profit margin was 13.71% while profit-before-tax margin was 8.4%.

The public issue would comprise 80 million shares for the public, 20 million shares for eligible persons, and 250 million shares through private placement to select investors. The offer-for-sale tranche meanwhile will also be done through private placement to select investors.

Proceeds from the sale of existing shares would go entirely to the selling shareholders, including chief executive Yeo Hock Cheong and a group of foreign investors. 

KAF Investment Bank is the principal adviser, sponsor, underwriter and placement agent for the IPO.