IJM Corp group chief executive officer and managing director Lee Chun Fai
KUALA LUMPUR: IJM Corporation Bhd
has entered into a conditional subscription agreement for the proposed subscription of 44.83 per cent stake in Pestech International Bhd for RM124 million.
In a filing with Bursa Malaysia today, IJM said upon completion of the proposed subscription, IJM’s shareholding in the enlarged share capital of Pestech stood at 44.83 per cent, excluding treasury shares.
It said as per regulatory requirements, IJM would be obligated to make a mandatory take-over offer for the remaining Pestech shares and warrants but the company does not intend to proceed with the obligation and would seek an exemption from the Securities Commission after Pestech obtained its shareholders’ approval.
Meanwhile, in a separate statement, IJM said the proposed subscription is a synergistic opportunity for the company to acquire a strategic stake in a listed company with core businesses in high-voltage electrical transmission as well as rail electrification and signalling.
It said as a strategic partner, IJM’s diversified businesses, robust balance sheet and corporate governance credentials would accelerate Pestech’s growth potential, expand the company’s market reach and access to new opportunities.
IJM said the investment also offered the company access to Pestech’s transmission line projects in Cambodia, where Pestech has established a foothold, and other developing countries in the region, further supporting IJM’s regional expansion strategy for growth in emerging markets.
IJM chief executive officer and managing director Lee Chun Fai said this strategic investment in Pestech brought synergistic opportunities for both companies in the growing energy transmission and rail electrification sectors.
"By including Pestech’s capabilities into our diversified portfolio, we will create synergies and deliver comprehensive solutions to customers across various sectors.
"Together, we are well-positioned to strengthen our position in the industry, diversify revenue streams and drive sustainable growth,” he said.
Barring any unforeseen circumstances, the proposal is expected to be completed in the fourth quarter of 2023.
Pestech, which operates in Malaysia, Cambodia, Philippines, Thailand, Papua New Guinea and the West African region, is a leading engineering, procurement, manufacturing, construction and commissioning contractor in high-voltage and extra-high-voltage transmission lines.
The company’s outstanding order book of RM1.56 billion as of 31 March 2023 and receivables of RM1.82 billion, largely consisting of long-term deferred payment contracts, are expected to contribute positively to the company. - Bernama
