KUALA LUMPUR (July 5): TechStore Bhd, an enterprise IT services firm, has filed for an initial public offering (IPO) on the ACE Market to raise funds for expansion, including adding staff and buying new hardware and software.

The proposed IPO involves a public issue of 125 million new shares and an offer-for-sale of 25 million existing shares at a price to be determined later, according to its draft prospectus. All in all, the listing would offer up to a 30% stake in the company.

“Our working capital requirements are expected to increase in tandem with the expected growth in our business,” TechStore said. Apart from staff remunerations, the company also plans to use some of the proceeds as tender bonds and performance bonds for future projects.

TechStore mainly provides IT security and automation solutions, including command and control systems, surveillance systems such as closed-circuit televisions and fire alarms, as well as electronic payment and operating systems.

The company has an order book totalling RM135.8 million, catering to Malaysia and Singapore clients in transportation, hospitality, education, logistics and banking industries. For the latest financial year ended December 2023, the company recorded net profit of RM7.7 million on revenue of RM62.2 million.

Under the IPO’s public issue, TechStore will make 25 million new shares available to the Malaysian public and 25 million shares for eligible persons. The company will also set aside 62.5 million new shares to bumiputera investors and 12.5 million shares to select investors.

TechStore has also earmarked part of the proceeds to partially repay bank borrowings that currently totalled RM39.2 million, and set up new offices in Johor, where the company is carrying out projects related to the Rapid Transit Link between Singapore and Malaysia.  

Meanwhile, proceeds from the offer-for-sale through private placement to select investors will accrue entirely to the sole selling shareholder Mohd Fadzil Mohd Daud, who is TechStore’s current executive director in charge of operations.

Tan Hock Lim is the current largest shareholder of TechStore with 78.7% equity interest while Fadzil has 21.3%. Post-IPO, Tan’s holdings will be diluted to 59%, while Fadzil's stake will be trimmed to 11%.

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