KUALA LUMPUR (Nov 21): Northern Solar Holdings Bhd has signed an underwriting agreement with M&A Securities Sdn Bhd for its proposed initial public offering (IPO) on the ACE Market of Bursa Malaysia.

The solar energy firm said its IPO scheduled to take place in February 2025. Under the underwriting agreement, M&A Securities will underwrite a total of 27.7 million new shares made available to the Malaysian public and shares set aside to eligible persons under pink form allocations.

The IPO entails a public issue of 67.3 million new shares and the sale of 35.6 million existing shares. All in all, the listing would offer investors up to a 26% stake in the company.

Under the IPO’s public issue, Northern Solar will make 19.78 million shares available to the public and 7.91 million shares to eligible persons. The remaining 39.6 million new shares will be placed out to Bumiputera investors.

Managing director Lew Shoong Kai highlighted the IPO’s role in boosting the company’s working capital to secure larger EPCC contracts. “This will position us to expand our portfolio and meet growing demand for solar PV systems,” he added.  

Northern Solar specializes in the engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) systems, renewable energy generation, and operations and maintenance services.

The company owns and operates 10 solar PV systems, and another four solar PV systems under its 20%-owned Engtex Energy Sdn Bhd. Pipe and valve maker Engtex Group Bhd (KL:ENGTEX) owns 80% of Engtex Energy. 

Real estate developer Lagenda Properties Bhd (KL:LAGENDA), which has a 15% direct stake in Northern Solar, will be diluted to 12.5% post-IPO. 

Northern Solar has also earmarked a portion of the IPO proceeds to repay its bank borrowings, set up a corporate office and command centre, as well as expand existing offices and establish new ones.

From FY2022 to FY2024, Northern Solar’s revenue soared from RM22.2 million to RM78 million, a 51.9% two-year compounded annual growth rate (CAGR). Profit after tax also surged from RM3.1 million to RM10.1 million, marking a CAGR of 48%.  

The offer-for-sale, meanwhile, will be done through private placement to select investors. Proceeds from the sale of existing shares will accrue entirely to the selling shareholders Lew and Chew, who will reduce their holdings to 30.8% each. M & A Securities serves as the adviser, sponsor, underwriter, and placement agent for the IPO.