KUALA LUMPUR (July 11): CBH Engineering Holding Bhd, an electrical engineering service firm, filed for an initial public offering (IPO) on the ACE Market to raise funds for new equipment and to free up working capital.

The proposed IPO involves a public issue of 298 million new shares and an offer-for-sale of 188.09 million existing shares at a price to be determined later, according to the draft prospectus posted to Bursa Malaysia. All in all, the listing offers investors up to 26% stake in the company.

“As part of our future plans, we intend to increase our market presence by tendering for projects with higher contract value,” CBH said. The company has submitted six bids worth RM496.09 million, and has earmarked a portion of the IPO proceeds to buy power cables and transformers among other parts.

CBH specialises in electricity supply distribution systems. The company designs, installs and maintains low- to high-voltage electrical systems. The company also provides mechanical engineering works for building systems, installing systems such as fire protection, plumbing, and renewable energy.

Total unbilled order book stood at RM207.04 million from 13 existing contracts comprising mechanical and electrical engineering works. In the financial year ended Dec 31, 2023, CBH made net profit of RM33.05 million on the back of RM207.95 million in revenue.

Under the public issue, CBH will allocate 94.05 million new shares to the Malaysian public and 28.42 million shares for eligible persons. The company will also set aside 47.02 million new shares to Bumiputera investors and 128.52 million shares to select investors through private placement.

Proceeds raised from the new share sale will also be used as marginal deposits to be pledged with financial institutions as performance bonds for future projects, freeing up internal funds. “We intend to pursue a larger-scale” mechanical and electrical engineering projects moving forward, CBH noted.

CBH also plans to increase its headcount by 14 people, including 10 engineers as well as other support staff, and has earmarked part of the proceeds as payment to subcontractors for future projects secured. The rest will be used to defray listing expenses.

Meanwhile, the offer-for-sale will be done through private placement to select Bumiputera investors and proceeds will accrue entirely to CBH Equities Sdn Bhd, controlled by co-founder and managing director Cheah Boon Hwa and his siblings.

Mercury Securities is the IPO’s principal adviser, sponsor, underwriter and placement agent.