KUALA LUMPUR (April 3): Engineering solutions provider Kawan Renergy Bhd on Wednesday signed an underwriting agreement with M&A Securities for its upcoming initial public offering (IPO) on the ACE Market of Bursa Malaysia.

The agreement moves the group, which designs, fabricates, installs and commissions industrial process equipment, process plants as well as renewable energy and co-generation plants, a step closer to its scheduled listing by the second quarter (2Q) of 2024.

The IPO will help expedite the company’s expansion plans, Kawan Renergy managing director Lim Thou Lai said in a statement, by allowing it to tap into the equity capital market for better financial flexibility for upcoming opportunities.

“The industrial process equipment industry continues to show promising prospects, supported by the improved demands of various sectors that utilise such equipment,” he said.

Malaysia’s rising foreign direct investment may boost demand for industrial process equipment, especially for sectors like oleochemical, food, utilities, energy and sustainable fuel, he said, adding that “weakening ringgit also helps make our products more competitive both locally and internationally”.

Proceeds from the IPO have been earmarked for working capital for ongoing and future co-generation plant projects, to buy additional machinery, repay bank borrowings, and improve output at its 1.2-megawatt biogas Bercham plant.

The offering involves a public issue of 110 million new shares, or 20% of its enlarged share base, as well as an offer for sale of 34.5 million existing shares. All in all, the IPO offers up to 25.3% stake in the company.

Under the underwriting agreement, M&A Securities is to underwrite 46.8 million shares under the public portion — 27.5 million shares made available to the Malaysian public and 19.3 million shares allocated to eligible persons.

The other 63.2 million shares under the IPO’s public offering are reserved for Bumiputera investors approved by the Ministry of Investment, Trade and Industry.

The offer-for-sale tranche also sets aside 5.5 million shares to Bumiputera investors while the rest will go to select investors.

M&A Securities is the IPO’s principal adviser, sponsor and placement agent.