PETALING JAYA: Building and infrastructure construction services provider Nestcon Bhd aims to raise RM45.1 million from its listing on Bursa Malaysia’s ACE Market with the issuance of 161 million new shares at an offer price of 28 sen per share.
From the initial public offering (IPO) proceeds, it has allocated RM6 million for establishing industrialised building system facility for the building division, RM6.6 million for acquisition of machineries and equipment for business expansion in the civil engineering and infrastructure division, RM1 million for upgrading of software and systems, RM16.5 million for repayment of bank borrowings, RM11 million for working capital, and RM4 million to defray the estimated listing expenses.
Nestcon group managing director Datuk Lim Jee Gin said the company’s prudent management and strict cost discipline enabled it to withstand the Covid-19 crisis and multiple trials and tribulations in the past.
“While our revenue in FY20 was marginally affected by the MCO 1.0, our profit performance remained intact with profit after tax and non-controlling interests margin improving from 3.5% in FY19 to 4.2% in FY20. Our cash flow from operating activities was also positive as at Dec 31, 2020. We believe the results speak volume of the capabilities of our management team in manoeuvring through tough times,” he told the media during its prospectus launch today.
He added that after a year of muted growth, it is encouraging to witness the upward trajectory of the domestic economic activities and recovery momentum in the construction sector.
“Project tenders are increasing albeit at a slower pace. Our tender sum has grown to about RM2.8 billion, with a good balance of tenders from both building and infrastructure segments. Despite the robust prospective project pipeline, we do not intend to rest on our laurels,” Lim said, adding that the company has a strong tender book and historical successful tender rate at 15% to 20%.
He said the different stages of MCO did not have a big impact on the company’s financial performance as it has a diversified portfolio with seven ongoing building projects at different stages of completion.
“Our primary focus is Malaysia market as we see a lot of opportunities here,” he replied when asked if the company would start any overseas projects.
Out of the 161 million new shares to be issued representing 25% of the enlarged share capital, 32.2 million shares will be made available for application by the Malaysian Public, while 32.2 million shares will be made available for application for eligible directors, employees, and persons who have contributed to the success of the company.
A further 80.5 million shares will be made available by way of private placement to bumiputra investors and 16.1 million shares will be made available by way of private placement to selected investors.
Besides, the offer for sale of 32.2 million existing shares will be made available by way of private placement to selected investors.
Applications for the IPO will close on June 17 and the listing is slated for June 29.
Upon listing on the ACE Market, Nestcon will have a market capitalisation of RM180.27 million based on the issue price of 28 sen and its enlarged total number of issued shares of 643.8 million shares.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter, and placement agent, while Eco Asia Capital Advisory Sdn Bhd is the financial adviser for Nestcon’s IPO exercise.