KUALA LUMPUR: Integrated power technology company Pestech International Bhd plans to raise RM12.88mil from its listing exercise which involves the sale of 12.88 million shares of 50 sen each at an offer price of RM1 each.
The company, which is seeking a listing on the Main Market of Bursa Malaysia on May 30, said that of the 12.88 million shares, it would offer six million shares to the public and 5.367 million shares for eligible directors, employees and persons who contributed to the group. The remaining 1.513 million shares would be placed out.
It said the subscription period for its shares ends on May 18.
During the launch of its prospectus, founder and executive chairman Lim Ah Hock said: “As part of the group's business expansion strategy, RM1.8mil of the expected total proceeds of RM12.88mil from our initial public offering (IPO) will be utilised for product development and business expansion in existing and other developing markets.”
From the RM1.8mil, RM1.4mil will channelled into the development of high-value products, while RM400,000 will be used for existing market expansion.
Chief executive officer Paul Lim Pay Chuan said that through manufacturing its own products, Pestech would be able to eventually reduce purchase of foreign third party supplies and increase operational profit.
Another RM6mil raised from the IPO will be used to pay off its existing debts from project financing to bring the gearing level down from 0.46 to 0.24 after the IPO.
Lim added that the company was in a strategic and comfortable position to select projects to take on.
Pestech designs and installs high voltage and extra high voltage substations, transmission line and underground cable systems. It also manufactures propriety power system components and equipment.
“We have proven ourselves (as a dependable contractor) and gone through a high level barrier of entry that now allows us to have orders from the Asean markets,” he said.
As at April 16, Pestech's order book stood at RM82.20mil.
The integrated power technology company recently obtained two letters of award from Tenaga Nasional Bhd (TNB) for projects in Teluk Ramunia and Sarawak amounting to RM105.73mil, deliverable until 2014.
For its financial year ended Dec 31, 2011, Pestech recorded net profit of RM12mil on the back of RM130.95mil revenue.
Pestech considers TNB a key domestic client accounting for 16% of the group's revenue. The company has 2.4% market share in Peninsular Malaysia and Sabah.
“About 90% of our local revenue are recurring due to the nature of our business, mostly from TNB but also the industrial customers,” Lim said.
The overseas markets Pestech serves are Cambodia, Sri Lanka, Papua New Guinea, Ghana, Tanzania and Brunei.
Foreign revenue contribution has been growing steadily over the past five years, making up 76.6% of the company's revenue in 2011.
It is looking to venture into the Laos, Myanmar and Vietnam market.
Bank Islam is the advisor for the IPO, which automatically makes Pestech appealing to investors seeking syariah-compliant listed companies.
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