Nestcon offering 161m new shares under IPO

Datuk Bill Tan, managing director of corporate finance of M&A Securities Sdn Bhd (left) and Datuk Dr Lim Jee Gin, group managing director of Nestcon Bhd after the signing of the underwriting agreement on Monday, May 3, 2021 for the construction company's proposed listing on the ACE Market.

KUALA LUMPUR: Construction company Nestcon Bhd is offering 161 million new shares and also placing out 32.20 million existing shares as it seeks to list on the ACE Market of Bursa Malaysia.

The company said on Monday the 161.0 million new shares represented 25.0% of the group’s enlarged total number of shares.

Under the agreement, M&A Securities Sdn Bhd will underwrite 64.4 million of the 161 million new shares, comprising portions to be made available to the Malaysian public as well as eligible directors, employees, and persons who have contributed to the success of the group.

Of the 161 million new shares, it said 32.2 million will be allocated to the Malaysian public via balloting, another 32.2 million shares under the pink form allocations, 16.1 million shares will be placed out to selected investors and the remaining 80.5 million new shares placed out to approved Bumiputera investors.

Nestcon is involved in civil engineering and infrastructure works in Malaysia and its broad spectrum of expertise including the construction of residential, commercial, industrial, and leisure properties. It is also involved in earthworks, bridges, roadworks, and drainage systems.

Group managing director Datuk Dr Lim Jee Gin described the underwriting agreement as the last mile of its journey in becoming a public listed entity.

“This IPO exercise brings not only capital funding but also other indirect benefits such as an enhanced brand presence as well as the flexibility to tap into the capital market in the future, ” he said.

Lim said last year was tremendously challenging for the construction industry but he believes the worst has passed.

For 2021, he said the Statistics Department and Protégé Associates forecast the construction industry in Malaysia to grow by 7% year-on-year.

“So far, we have witnessed an improvement in terms of job flow and we believe this trend will continue throughout the year underpinned by the recovery of the general economy following the roll-out of the vaccination programme, ” he said.

Lim said Nestcon would embrace mass production principles via the adoption of an industrialised building system or IBS.

He added part of the proceeds from the IPO would be used to set up its own on-site IBS centre to speed up the project delivery time, reduce reliance on foreign workers while improving the quality of work.

“We are also eyeing larger civil engineering and infrastructure projects such as highways, transportation infrastructure, various renewable energy projects, and so forth. To do so, we intend to strengthen our machinery and equipment count as well as readying a sizeable sum of working capital as performance bonds in anticipation for these large-scale projects, ” Lim said.

Nestcon is scheduled to be listed on the ACE Market by June 2021, with M&A Securities as the adviser, sponsor, underwriter, and placement agent for the IPO.