KUALA LUMPUR (Nov 30): Integrated engineering supporting services provider Coraza Integrated Technology Bhd has inked an underwriting agreement with M&A Securities Sdn Bhd in conjunction with its initial public offering (IPO) exercise on the ACE Market of Bursa Malaysia. 

In a statement Tuesday (Nov 30), Coraza said the IPO involves the issuance of 117.8 million new shares in the group, representing 27.5% of its enlarged share capital and an offer sale of 21.4 million existing shares to selected investors by way of private placement. 

Of the 117.8 million new shares, 21.4 million new shares will be made available to the public via balloting; 21.4 million new shares for its eligible directors, employees and persons who have contributed to the success of the group; while the remaining 74.9 million new shares are earmarked for private placement to selected investors by way of private placement.

M&A Securities, which is the adviser, sponsor, underwriter and placement agent for the IPO exercise, will underwrite a total of 42.8 million new shares. 

Coraza managing director Lim Teik Hoe said the listing will allow the group to tap into the equity capital market to raise funds to accelerate the growth of the group's engineering supporting services business. 

This will also further strengthen Coraza’s financial position as the group embarks on the next phase of its business expansion plans, Lim said.

Proceeds from the IPO will mainly be used to part finance the construction of a new factory adjacent to its current facility in Nibong Tebal, Penang and purchase new machinery over the next three years to improve its production capacity as well as service offerings.

“Over the last two years, we have experienced a substantial continuous increment of orders across all market sectors, and especially the semiconductor sector. Hence, it is crucial for us to purchase new machinery to increase our capacity and improve our service offerings to meet the increasing demand from our customers.

“To this end, we have purchased and commissioned machinery during the third quarter of 2021. Moving forward, we will progressively acquire machinery over three years which will increase our capacity by a further 25%.

“The machinery to be acquired over the longer term and installed in our new factory will enhance the company’s capabilities in meeting aerospace engineering and quality standards, which are higher than those of other industry segments. This serves as a competitive advantage for our group to engage customers, even for the non-aerospace industry segments,” he added.

Part of the proceeds will also be used to purchase and integrate a new Enterprise Resource Planning (ERP) system to streamline and automate its processes for more efficient operations, for extension of existing factory to add additional area for capacity expansion, to repay bank borrowings, and to defray the estimated listing expenses.

Coraza is scheduled to be listed on the ACE Market by January 2022.