KUALA LUMPUR (Sept 26): Wasco Bhd (KL:WASCO) said on Friday the proposed spin-off listing of its renewable energy unit had been approved by the securities regulator.
The proposed initial public offering (IPO) of Wasco Greenergy Bhd was approved in a letter dated Sept 25, the company said in an exchange filing. A timeline was not provided, though a company would have six months to complete its IPO from the date of approval.
The IPO will involve issuance of shares under the retail tranche and sale of existing shares to institutional investors, at a price to be determined later. All in all, the share sale will offer up to 30% stake in Greenergy.
Wasco, the parent company mostly known for providing pipe coating to the oil and gas industry, considers Greenergy’s business as “a distinct and viable business of its own, which merits a separate listing on the Main Market”, according to the draft prospectus filed in July.
Greenergy mainly builds biomass energy systems that burn agricultural wastes with a boiler, and power plants that typically use natural gas to heat water into steam to power turbines and generate electricity.
However, the company is now seeking to transition into owning and operating biomass steam power plants for recurring revenue using part of the proceeds from the IPO.
Further, the company plans to set up new offices to expand its operations in Indonesia. “This will allow our group to capitalise on potential business opportunities” in the engineering, procurement, construction, and commissioning of steam energy systems and auxiliary facilities, Greenergy said.
Part of the proceeds will also be used as capital expenditure for new equipment and machinery, and the upgrade of its headquarters, as well as for digitalisation of business systems and processes. A small portion will also be set aside for spending on research and development.
CIMB Investment Bank is the principal adviser, bookrunner, managing underwriter, and underwriter for the IPO. The company may add more bookrunners and underwriters later.