KUALA LUMPUR (Aug 1): Northeast Group Bhd, a precision component manufacturer, has secured approval from Bursa Malaysia for an initial public offering (IPO) on the ACE Market.
The approval marks another step forward for the Penang-based company, which mainly manufactures components used in industries including electrical and electronics, semiconductor, and telecommunications. The company filed a draft prospectus in March.
“As automation takes hold across industries, the landscape for precision engineering components is undergoing a significant transformation,” said Northeast managing director Ng Chay Chin. “We believe we are well positioned to grow further, given the approval received from Bursa for our listing.”
Northeast is raising funds from the IPO for expansion, including 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. All in all, the listing would offer investors up to a 30% stake in the company.
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 the 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% to 25%.
“Currently, all our existing factories’ production floor space [is] already fully utilised,” said Ng.
The company plans to expand its production floor space and increase operating capacity to “enable us to cater for our plan to grow our customer base, and serve more local and international customers”, he added.
Northeast has also earmarked some of the proceeds as working capital, to repay bank borrowings, and to defray estimated listing expenses.
Meanwhile, any money raised from the offer for sale will accrue entirely to the selling shareholders, including managing director Ng and his brother Ng Chai Hee, who is also the senior operations director.
Affin Hwang Investment Bank is the principal adviser, sponsor, sole placement agent, and sole underwriter for the IPO.