KUALA LUMPUR (Aug 27): M&A Equity Holdings Bhd (KL:M&A) has proposed a special Bumiputera share issue of up to 285.53 million new shares to investors approved by the Ministry of Investment, Trade and Industry (Miti), to comply with the Bumiputera equity requirement.

The special issue of 285.53 million shares represents 14.3% of its existing issue share capital (excluding treasury shares). The issue price will be determined at a later date, said the stockbroker and corporate finance adviser in a bourse filing.

The proposed special Bumiputra issue is undertaken to fulfil the Bumiputera equity condition imposed by the Securities Commission (SC) in relation to the approval of the reverse takeover of M&A Equity by M&A Securities Sdn Bhd.

Under the terms of the SC’s approval, M&A Equity is required to allocate 12.5% of its enlarged number of issued shares to Bumiputera investors approved or recognised by Miti within one year after registering after-tax-profit or three years after the implementation of the proposals, whichever earlier.

M&A Equity recorded a net profit of RM12.2 million for the financial period between Aug 1, 2022 and June 30, 2023. Consequently, M&A Equity had been required to fulfil the Bumiputera equity requirement within 12 months of June 30, 2023 — on or before June 30, 2024.

This deadline was subsequently extended by the SC to Sept 30, 2024, March 31, 2025 and Dec 31, 2025.

For illustrative purposes, assuming the placement shares were issued at 24 sen each, M&A Equity stands to raise RM68.53 million from the exercise. The proceeds will mainly be used to fund working capital purposes, including day-to-day administrative and operational expenses to conduct its financial services business.

The proceeds will be allocated mainly for the working capital of M&A Equity and its subsidiaries, namely M&A Securities, M&A Value Partners Asset Management Malaysia Sdn Bhd and M&A Digital Sdn Bhd.

The working capital of M&A Securities includes funds required to settle daily obligations for trades that are due and payable to Bursa Malaysia Securities Clearing Sdn Bhd for its stockbroking business, while the working capital of M&A Digital includes funds required to provide financing schemes to individuals and small and medium enterprises which are underserved by banks or other licensed financial institutions due to strict lending requirements imposed by such banks or other licensed financial institutions, it added.

The proposed special Bumiputera issue may have a corresponding dilution in the earnings per share (EPS) of the company as a result of the increase in the number of shares to be issued pursuant to the proposed special Bumiputera issue, it said.

M&A Equity’s share price closed up half a sen or 2.04% to 25 sen on Wednesday, giving the group a market capitalisation of RM501 million.