ACE Market-bound Kawan Renergy signs underwriting agreement

PETALING JAYA: Engineering solutions provider, Kawan Renergy Bhd has entered into an underwriting agreement with M&A Securities Sdn Bhd in conjunction with its upcoming initial public offering (IPO) on the ACE Market of Bursa Malaysia.

Kawan Renergy Group through its subsidiaries, Kawan Engineering Sdn Bhd and Kawan Green Energy Sdn Bhd, is principally involved in the design, fabrication, installation and commissioning of industrial process equipment, process plants as well as renewable energy and co-generation plants.

Its engineering solutions are applicable for a wide range of industries such as food processing, oleochemical and chemical processing, oil and gas, waste recovery, power plant and utilities.

The group is also involved in the power generation and sale of electricity business through Bercham Plant, a landfill biogas power plant located in Ipoh, Perak with an installed capacity of 1.2-megawatt (MW) of electricity and a net export capacity of 1MW.

In a statement, Kawan Renergy said its IPO entails a public issue of 110 million new ordinary shares, representing 20% of its enlarged share capital, as well as an offer for sale of 34.5 million existing shares, or 5.3% of its enlarged share capital to selected investors by way of placement and 1% to selected bumiputra investors approved by the Investment, Trade and Industry Ministry (Miti).

Out of the 110 million new shares, 27.5 million shares will be made available to the Malaysian public via balloting, while 19.3 million shares are allocated for eligible directors and employees as well as persons who contributed to the success of the group (pink form allocations). The remaining 63.2 million shares are reserved to selected bumiputra investors approved by Miti.

Pursuant to the underwriting agreement, M&A Securities will underwrite a total of 46.8 million shares made available to the Malaysian public and the pink form allocations.

Kawan Renergy is scheduled to be listed on the ACE Market of Bursa Malaysia by the second quarter of 2024, with M&A Securities as the principal adviser, sponsor, underwriter and placement agent for its IPO.Kawan Renergy managing director Lim Thou Lai said the IPO exercise will expedite the group’s expansion plans and allow it to tap into the equity capital market, thus granting the company better financial flexibility to capitalise on the upcoming opportunities.

“The IPO proceeds will mainly be used as working capital to enable the group to undertake more quality projects, moving up the value chain, as well as to strengthen our power generation and sale of energy business.”

Lim added that the industrial process equipment industry continues to show promising prospects, supported by the improved demands of various sectors that utilise such equipment.

“Increasing foreign direct investment in Malaysia is set to boost our industrial process equipment, especially for sectors like oleochemical, food industries, utilities, oil and gas and sustainable fuel.

“The weakening of the ringgit also helps make our products more competitive both locally and internationally.”

Additionally, he said the transition towards renewable energy and energy-efficient co-generation opens up great opportunities for Kawan Renergy.