NationGate aims to raise RM166mil from IPO

PETALING JAYA: Nationgate Holdings Bhd will use a large part of the proceeds raised from its listing to repay bank borrowings and as working capital.

The ACE Market bound electronic manufacturing services (EMS) provider aims to raise RM165.5mil from its initial public offering (IPO) of 435.5 million new shares at an issue price of 38 sen per share.

“This IPO is timely for our group as it will raise proceeds to fuel our next phase of growth.

“Over the next three years, we intend to expand our EMS business by increasing our offerings to our existing customers comprising multinational corporations (MNCs) with a diversified range of products.

“We also have plans to leverage on our track record in the EMS industry to secure new customers,” said NationGate managing director Ooi Eng Leong.

In line with its expansion, Ooi said RM5.93mil or 3.6% of the funds would go to acquiring new machinery and equipment to add four surface-mount technology (SMT) assembly lines for the group’s printed circuit board assembly services.

“The new machinery and equipment are also expected to enhance our EMS production output. As of Nov 14, 2022, we have a monthly production capacity for SMT services of up to 1.26 trillion mounting points per month.

“Upon completion of the expansion of our SMT assembly lines within 36 months, our monthly production capacity is expected to increase by up to 38.4 million mounting points to a maximum of 1.296 trillion mounting points per month,” he said.

Some RM48.4mil of the proceeds will go towards the company’s working capital to purchase various raw materials, consumables and electronic components while RM105.5mil will be set aside for the repayment of bank borrowings.

The remaining RM5.7mil will be allocated to defray estimated listing expenses.

NationGate executive director cum chief operating officer Lee Kim San said despite the high interest rate environment and warnings of a global recession next year, the EMS industry is still showing strong growth.

“We are primarily involved in the infrastructure networking, telecommunications, data computing, and automotive segments of the industry. The divisions are expected to charter good growth going into 2023 and over the next few years,” he said.

Lee added the group could be considered to be an export company as the majority of NationGate’s customers are MNCs with operations in Malaysia.

“We are also witnessing many Chinese manufacturers moving their operations out of China to other countries with our country being one of the options. China is a big market and as such we have benefited from this development,” he said.

Lee said the group had accumulated borrowings for its capital expenditure for investment purposes.

“Our listing has been delayed for two years. In that time frame we acquired funds to enhance our capabilities and upgrade our facilities.

“This is also the reason why our allocation for capital ex[enditure is very low. With all our facilities in place, we are in a very good position to tap into growth for the next two to three years. The group also has strong cash flows,” he said.

NationGate is looking at opportunities to expand the number and value of semi-finishes sub-assemblies the group can assemble and test for fully-assembled electronic products.

“Our business collaboration with GoldTek Technology Co Ltd allows us to secure new business growth and further expand our product category such as portable and low power consumption Internet of Things electronic devices which is an ideal channel to tap into their global customer base,” he said. NationGate intends to have a 30% dividend policy payout rate following its listing.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.