KUALA LUMPUR (Jan 27): ES Sunlogy Bhd, a provider of mechanical and electrical (M&E) engineering services as well as renewable energy, has launched its prospectus for an initial public offering (IPO) on the ACE Market, as it seeks to raise up to RM63 million to partly fund its expansion plans.
The IPO entails the issuance of 140 million new shares and an offer for sale of 70 million existing shares. The public issue is expected to raise gross proceeds of RM42 million for expansion, while the offer for sale worth RM21 million will go to its selling shareholders.
Together, these shares represent a 30% stake in the company, according to its prospectus released on Monday.
“This IPO will enable us to further accelerate our efforts in delivering high-quality M&E engineering solutions while advancing Malaysia’s renewable energy agenda,” ES Sunlogy managing director Khor Chuan Meng said in a statement.
Priced at 30 sen per share, the IPO values ES Sunlogy at a market capitalisation of RM210 million, with a price-to-earnings ratio of 15 times its earnings for the financial year ended July 31, 2024. The company reported a profit after tax of RM13.54 million on revenue of RM191.09 million during that year.
ES Sunlogy specialises in a broad range of services, including high-tension and low-voltage electrical systems, extra-low-voltage systems, mechanical engineering for building services and solar energy generation through large-scale renewable projects.
The company is currently engaged in 35 engineering projects with a total contract value of RM421.59 million, of which RM267.4 million remains unbilled.
Under the public issue, 35 million new shares will be allocated to the Malaysian public, while 17.5 million shares are designated for eligible individuals. In addition, 87.5 million shares will be privately placed with approved Bumiputera investors.
Of the RM42 million proceeds, RM14.10 million will be allocated for the development and construction of the Selarong large scale solar photovoltaic plant that could generate up to 29.99 megawatts.
The project, with a built-up area of approximately 5.88 million square feet, is a joint venture with TNB Renewables Sdn Bhd, a unit of Tenaga Nasional Bhd (KL:TENAGA), and Blazing Solar Sdn Bhd, a subsidiary of Solarvest Holdings Bhd (KL:SLVEST). ES Sunlogy holds a 40% stake in the venture, while TNB Renewables and Blazing Solar each own 30%.
The remaining proceeds of RM14 million will be allocated for partial repayment of bank borrowings, RM9.18 million for general working capital requirements and RM720,000 for the acquisition of enterprise resource planning software. Meanwhile the remaining funds will cover listing expenses.
“The funds to be raised from our IPO will support our long-term strategic initiatives, including expanding our capabilities in the renewable energy sector, strengthening our financial position, enhancing operational efficiency, improving our visibility and contributing to the nation’s sustainable development,” Khor added.
The gross proceeds from the offer for sale otherwise will accrue entirely to selling shareholders, including Khor, executive director Chu Kerd Yee and Datuk Keh Chuan Seng. Post-IPO, Khor’s stake will be diluted to 21%, while Chu’s and Keh’s holdings will reduce to 28% and 21%, respectively.
Keh is also the largest shareholder of waste management firm Tex Cycle Technology (M) Bhd (KL:TEXCYCL) and serves as executive chairman of stainless steel manufacturer K Seng Seng Corp Bhd (KL:KSSC) and contract manufacturer Ge-Shen Corp Bhd (KL:GESHEN).
M&A Securities is acting as the adviser, sponsor, underwriter and placement agent for the IPO.