WITH plans to develop an integrated waste management processing plant underway, Borneo Waste Industries Sdn Bhd (BWI) has turned to equity crowdfunding (ECF) for interim funding as it waits for negotiations with private equity investors to wrap up.
The company has launched a campaign on Ata Plus to raise up to RM3mil for a 6.7% stake over the next two months. This values the company at RM42mil.
“We are in the process of negotiating with several potential equity investors currently.
“The company has chosen the ECF route to raise interim funding during the process of evaluating potential equity partners for a private placement exercise. This process is time consuming and it involves a due diligence period taken by potential equity partners for our project, ” says founder and chief executive officer Raven Sockanathan.
The potential private placement exercise is expected to take place in about a year’s time and will offer its ECF investors a clear and relatively early exit.
“We also want to offer the ordinary person the opportunity to benefit financially by investing at this early stage at a very favourable valuation and to be able to exit early at the next funding round, which is expected to be completed within 12 months, with hopefully a generous upside, ” he adds.
According to its financial advisor Deloitte Corporate Advisory Services Sdn Bhd, BWI has a net present value of approximately RM100mil, which values the 6.7% stake offered to investors at RM6.7mil.
In the event the offer for sale in the private private placement exercise does not materialise, BWI says investors could anticipate dividends to be declared after its third year of operations.
The indicative return on investment based on a projected free cash flow to the company is approximately eight years.
Established in November 2012, BWI is a waste management service provider based in Sabah with offices in Kota Kinabalu and Kuala Lumpur. BWI executed a 30-year concession agreement with Dewan Bandaraya Kota Kinabalu to develop and operate an integrated waste management processing plant at the Kayu Madang Sanitary Landfill (KMSL) in Telipok, Sabah from April 2018 to April 2048.
The project area covers 20 acres and is within 115 acres from the KMSL site. It is also situated adjacent to the Kota Kinabalu Industrial Park.
The KMSL is the central disposal site for municipal solid waste from Kota Kinabalu, Kota Belud, Penampang, Putatan and Tuaran.
BWI will be developing the integrated waste management processing plant to recycle the municipal solid waste and produce downstream intermediary and final products.
The funds raised from the ECF campaign will mainly be used for site preparation costs, pre-operating expenses, working capital, repayments and professional fees for the project.
The project aims to recycle up to 90% of the waste from KMSL by processing up to 800 tonnes of waste per day through environmentally sustainable technologies to produce useful intermediary and final products for various industries, such as agriculture, construction, manufacturing, commercial and energy. This, says the company, will extend the lifespan of KMSL and reduce the generation of landfill gases that are harmful to the environment.
Additionally, it can generate revenue by selling products such as recovered plastics, organic fertiliser, ferrous metal, compressed natural gas, used tyre crumbs and other recyclables. It also hopes to provide services such as generating renewable energy.
“The integrated waste management facility represents a major step forward to how we will treat our waste in the future. The days of just dumping waste in landfills are over and we are excited to bring innovation to this sector for the benefit of the environment and community, ” says Raven.
BWI expects to start construction of its facilities by the middle of this year and will take about four years to complete.
“We don’t foresee any major challenges in the development of our facilities as the technologies we intend to use have been tried and tested and used extensively worldwide, ” he says.
BWI expects to generate a revenue of RM24.1mil by 2022 with earnings before interest, tax, depreciation and amortisation (EBITDA) of RM10.1mil. By 2046, revenue from the concession is expected to hit RM75.1mil with ebitda of RM40mil.
“At the moment we are focused on the KMSL project but have definite intentions to replicate our business model in Peninsular Malaysia and the region as well, ” says Raven.
Meanwhile, Ata Plus notes that the investment campaign from BWI is a unique opportunity for retail investors to participate in social impact projects.
“BWI is the type of company we love seeing on our platform, not only for the potential fantastic returns they aim to offer investors, but also for the significant social impact of helping to clean up the environment and to recycle waste materials, ” says Elain Lockman, co-founder and director of Ata Plus.
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