KUALA LUMPUR (Feb 21): Solarvest Holdings Bhd is offering 98.83 million new shares, representing 25.3% of its enlarged share capital, in an initial public offering (IPO) to fund its expansion locally and overseas.
Of the 98.83 million new shares, 19.53 million shares are made available for public subscription, including Bumiputera public investors; and another 19.53 million shares for eligible directors or employees.
It will be placing out 20.70 million shares to selected investors, and 39.06 million shares to selected Bumiputera investors approved by the Ministry of International Trade and Industry.
The issue price for the ACE Market listing has yet to be fixed, according to its prospectus exposure which has been released on the Securities Commission Malaysia (SC) website today.
However, the company guided that it will be using proceeds raised from the listing to fund its expansion to the Southern region of Peninsular Malaysia, where a sales representative office and service centre will be set up in Johor.
It also intends to expand to Asian markets such as Taiwan and Vietnam, where it plans to partner with experienced local companies to form joint venture entities to undertake solar photovoltaic projects.
The company’s strategy to expand into the Southern region of Peninsular Malaysia and other Asian countries is aimed at diversifying its income base, since it is currently concentrated only within the Northern and Central regions of the peninsular.
The move is expected to expand its business and revenue and contribute positively to its earnings.
Additionally, proceeds raised will help fund the company’s working capital and acquisition of project machinery and equipment, besides the upgrading of software, hardware and equipment, to support its plans to tender for and to complete more projects in Malaysia.
“Some of the projects that we are involved in requires tender bonds and performance bonds. This results in the lock-up of a portion of our capital during the duration of the project, thereby affecting our liquidity for that duration.
“As such, the allocation to working capital is expected to enhance our Group's liquidity and cash flows, so that we will be in a stronger position to secure and complete more projects moving forward,” it said.
Another portion of the proceeds will be used to repay its bank borrowings. Solarvest has outstanding loans of RM3.2 million and an outstanding bank overdraft of RM1.6 million, the prospectus exposure shows.
In the past three years, its net profit has doubled from RM4.05 million (in its financial year ended March 31, 2016 [FY16]) to RM8.24 million in FY18, against a 28% growth in revenue to RM45.07 million in FY18 from RM35.29 million in FY16.
Solarvest is owned by AB Holdings (55%) and Main Market-listed Chin Hin Group Bhd (45%). Following the public share sale, their shareholdings will be reduced to 41.1% and 33.6% respectively.
Chin Hin gained entry into Solarvest in 2017, when it acquired a 45% stake in a solar system installer Atlantic Blue Sdn Bhd. Solarvest is one of Atlantic Blue’s associate companies.
Chin Hin closed two sen higher today to 76.5 sen, for a market capitalisation of RM420.80 million.