KUALA LUMPUR (Oct 15): Northeast Group Bhd (KL:NE) ended its maiden trading day on the ACE Market at 50.5 sen on Tuesday, a 0.5 sen gain from its initial public offering (IPO) price of 50 sen per share.
Its market capitalisation amounted to RM374 million.
The stock opened at 53 sen, marking a three sen or 6% increase from its IPO price. It was the most active counter of the day, with 153.1 million shares changing hands.
Investors snapped up shares of Northeast Group during its IPO, with the public portion oversubscribed by 73.42 times. Shares set aside for eligible persons were fully subscribed, while the private placement to select investors and approved Bumiputera investors were also taken up.
The company specialises in manufacturing precision engineering components used in industries such as photonics, electrical and electronics, semiconductors, telecommunications, and optoelectronics. It also offers surface finishing, sheet metal fabrication and mechanical sub-assembly services.
Northeast Group’s IPO consisted of a public issue of 168.99 million new shares, raising RM84.49 million, and an offer for sale of 51.8 million existing shares, raising as much as RM25.9 million.
Altogether, the listing offered investors a 29.84% stake in the Penang-based company.
The company is allocating 47.34% of the gross proceeds from the public issue for the construction of a new factory, which is expected to provide 79,020 sq ft of production floor space and accommodate about 200 computer numerical control (CNC) machines to support production activities.
Northeast Group has also earmarked 23.67% of the proceeds to repay bank borrowings and 14.65% for the purchase of 36 new CNC machines to increase its estimated annual operating capacity, while 7.81% will be allocated for listing expenses and the remaining 6.53% for working capital.
Proceeds from the sale of existing shares, meanwhile, will accrue to the selling shareholders, including managing director Ng Chay Chin and his brother Ng Chai Hee, who is also the senior operations director.
Executive director Chong Ewe Hean, senior business and sales director Yin Thien Hee, along with two other shareholders Ng Meng Hang and Tang Ah Lek also put up their existing shares for sale.
Affin Hwang Investment Bank was the IPO’s principal adviser, sponsor, sole placement agent and sole underwriter.