KUALA LUMPUR (Oct 1): Sabah-based construction firm Azam Jaya Bhd said on Tuesday it has signed an agreement with Inter-Pacific Securities to underwrite its initial public offering (IPO) on the Main Market.
Under the agreement, Inter-Pacific will underwrite the IPO shares to be offered to the Malaysian public and eligible persons under the pink form allocation, Azam Jaya said in a statement. The company is scheduled to be listed in November 2024.
“This listing will unlock greater resources and financial flexibility, enabling us to further enhance our construction capabilities and solidify our position as one of the major road infrastructure players in Sabah,” said Azam Jaya executive director Datuk Lo Vun Che @ Jessica.
Azam Jaya mainly builds road infrastructure, including roads, highways, bridges, flyovers and tunnels, in Sabah. The company is currently working on eight projects with an unbilled contract value totalling RM1.08 billion.
For the financial year ended Dec 31, 2023, the company reported a net profit of RM25.98 million on the back of revenue of RM280.77 million.
Azam Jaya ventured into industrial property development in 2015 through “The Factory @ Inanam” park with a gross development value of RM89.38 million. The company, however, does not intend to undertake any property development projects in the future, Azam Jaya said.
The proposed IPO involves a public issue of 78.8 million new shares and an offer-for-sale of 50 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 26% stake in the company.
Under the public issue, Azam Jaya will allocate 25 million new shares to the Malaysian public and 10 million shares to eligible persons. The company is also setting aside 43.8 million new shares to institutional and selected investors through private placement.
Proceeds from the IPO have been earmarked for the purchase of equipment such as excavators, dump trucks, motor graders, and bulldozers. The company said it plans to spend about RM30 million until end-2025 to acquire construction equipment and staff vehicles.
The company has budgeted RM2.5 million until end-2025 to increase the number of construction vehicles equipped with autonomous vehicle control modules to nine vehicles as well as to purchase one drone and the first four sets of handheld augmented reality surveying equipment.
The company has also earmarked part of the proceeds as working capital to reduce the reliance on credit facilities for contractual obligations, as well as to partially repay bank borrowings. The rest will be used to defray listing expenses.
The offer-for-sale tranche will be done through private placement to institutional and select investors. Proceeds from the sale of existing shares will go entirely to chairman Tan Sri Joseph Lo @ Lo Tain Foh and his son Datuk Jonathan Lo Chaw Loong, who is also Azam Jaya’s managing director.
Inter-Pacific is the IPO’s principal adviser, sole underwriter and sole placement agent.