This article first appeared in The Edge Financial Daily on October 3, 2019

KUALA LUMPUR: Iswarabena Group Bhd, which is primarily involved in civil engineering services and the sale of construction materials, is planning an initial public offering (IPO) on the ACE Market to raise funds for new equipment, lorries and a new workshop. Part of the proceeds raised will also be used for working capital and repayment of borrowings.

Its IPO will involve the issuance of 175 million new shares representing 18.9% of the company’s enlarged issued share capital, of which 46.2 million will be made available for application by the Malaysian public — half of which is meant only for bumiputera investors.

The remainder will consist of 8.69 million shares reserved for application by the company’s success contributors, directors and employees; a placement of 27.71 million to institutional and identified investors, and another placement of 92.4 million to identified bumiputera investors.

In addition, there will be an offer for sale of 80 million shares, representing some 8.7% of its enlarged share capital by existing shareholders, to institutional and identified investors.

For the financial year ended Dec 31, 2018 (FY18), the company posted a profit after tax of RM31.64 million, up 45% from FY17’s RM21.83 million, which is 44 times more than FY16’s RM492,000. Revenue for FY18 was RM206.17 million, up 33% from FY17’s RM154.63 million, which is more than double FY16’s RM65.77 million.

Iswarabena is 48.5% held by Isvara Sdn Bhd, which is jointly controlled by Noor Hafidzah Sahidan and Ruziana Karim, who are the promoters of Iswarabena’s IPO. Iswarabena executive director Tan Sri Selvarajoo Sinnaiyah has a direct 14.9% stake in the company, with an indirect 31.6% stake, while his wife Puan Sri Ananthy S A Kannan with a direct 13% and an indirect 33.4%.

The couple, together with their sons, Dr Jegan Selvarajoo, Tharmesh Selvarajoo, and Eswaran Selvarajoo — each has a 6.2% stake — as well as Md Daud Abdul Gapoor, with a 5% stake, are also joint promoters in the IPO.

The shareholders’ stakes will be trimmed following the offer for sale, with Isvara’s being reduced to 35%, while Selvarajoo’s direct stake will go down to 10.8% and his indirect to 22.9%, with Ananthy’s falling to 9.5% and 24.2% respectively. Their son’s stakes will also each be reduced to 4.5%, while Md Daud’s will drop to 3.6%. UOB Kay Hian Securities (M) Sdn Bhd is the IPO’s principal adviser, sponsor, placement agent and underwriter.