Kawan Renergy’s IPO oversubscribed by 95 times

PETALING JAYA: Engineering solutions provider Kawan Renergy Bhd has generated strong investor interest for its initial public offering (IPO), which has been oversubscribed by 94.99 times ahead of its listing on the ACE Market of Bursa Malaysia Securities (Bursa Securities).

Kawan Renergy is principally involved in the design, fabrication, installation and commissioning of industrial process equipment, process plants as well as renewable energy and co-generation plants. Its engineering solutions are applicable for a wide range of industries such as food processing, oleochemical and chemical processing, oil and gas, waste recovery, power plant and utilities. The group is also involved in the power generation and sale of electricity business.

Kawan Renergy’s IPO offers 144.5 million ordinary shares, including of 110 million new shares representing 20% of the enlarged share capital. With an issue price of 30 sen per share, Kawan Renergy is anticipated to raise RM33 million from its public issue. Additionally, there is an offer for sale of 34.5 million existing shares, or 6.3% of its enlarged share capital, by way of private placement to selected investors.

Kawan Renergy has received a total of 23,636 applicants for 2,639,698,700 shares, worth about RM791.9 million for the 27.5 million shares allocated to the Malaysian public, representing an overall oversubscription rate of 94.99 times. For the Bumiputera portion, 13,047 applications for 1,156,587,000 shares were received, representing an overall oversubscription rate of 83.12 times. As for the public portion, 10,589 applicants were submitted for 1,483,111,700 shares, resulting in an oversubscription rate of 106.86 times.

The 19.3 million shares available for application by the eligible directors and employees, as well as persons who have contributed to the success of the group have been fully subscribed.

Meanwhile, the private placement of 63.3 million new shares and 5.5 million existing shares for Bumiputera investors approved by Ministry of Investment, Trade and Industry, and 29 million offer-for-sale shares made available for application via private placement to selected investors have also been fully subscribed.

Notices of allotment will be posted to all successful applicants by May 27.

Managing director Lim Thou Lai said, “The strong response to our IPO reflects the capital market’s trust in Kawan Renergy’s capabilities and expansion strategy. We are well-positioned to capitalise on opportunities in the industrial process equipment industry, spurred by increasing demand for higher renewable energy and co-generation plants to enhance energy efficiency.”

Of the proceeds raised, RM15 million or 45.5% will be allocated for working capital to give the group the financial flexibility to undertake more cogeneration plant projects. Additionally, RM7.5 million or 22.7% will be allocated for the investment of a new 2MW power plant and output improvements for the Bercham plant. These investments directly target the growth of its power generation and electricity sales segment, enabling a more diversified income base that includes recurring income.

Kawan Renergy is scheduled to be listed on the ACE Market on May 29. Upon listing, it will have a market capitalisation of about RM165. million based on the issue price of 30 sen per share and the enlarged share capital of 550 million shares.