This article first appeared in The Edge Malaysia Weekly, on December 21 - 27, 2015.    

TALIWORKS CORP BHD received an overwhelming prelaunch demand for its placement of 43.98 million new shares at more than one times book, despite the challenging market condition and the FBM KLCI being well below its 2015 high.

The share placement, at RM3.20 apiece, was equivalent to 10% of its share base. It was done at a 10.4% discount to its closing price of RM3.57 on Oct 9 and a 9.5% discount to its five-day volume weighted average price of RM3.53.

The placement raised RM140.74 million — to be utilised to fund Taliworks’ joint-venture plans with the Employees Provident Fund (EPF). The partnership is expected to be earnings accretive.

In August last year, Taliworks and the EPF established a JV to acquire recurring income-generating infrastructure assets, including highway concessions.

Possibly because of the JV, investors were leveraging the share placement to gain exposure to Taliworks’ expected growth potential.

There was strong interest from long-only investors and high net worth individuals, which led to a book cover of more than 2.4 times.

Long-only investors took up some 94% of the placement shares, and 98% of the investors were domestic, while high net worth individuals accounted for 4% of the investors and hedge funds made up 2%.

Both a share split and an issuance of warrants were carried out to add more liquidity after the placement.

Without a doubt, the JV with the EPF seems to be an interesting one.

Taliworks, through its 85%-owned unit Pinggiran Muhibbah Sdn Bhd, has a 51% stake in Pinggiran Infrastructure Sdn Bhd. The EPF holds the remaining 49%.

Pinggiran Infrastructure’s assets include a 65% stake in Cerah Sama Sdn Bhd, which owns Grand Saga Sdn Bhd — the concessionaire of the 11.5km Cheras-Kajang Highway. Pinggiran Muhibbah previously sold 31.8% equity interest in Cerah Sama to the EPF for RM68.68 million.

Taliworks has gathered a high-powered board. Two of its directors are experts in power generation — former Malakoff Corp Bhd managing director Ahmad Jauhari Yahya and former investment banker Vijay Vijendra Sethu, who was previously a board member of Malakoff.

Former Economic Planning Unit director-general Raja Datuk Zaharaton Raja Zainal Abidin is a non-executive director of the company.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.