KUALA LUMPUR (Aug 14): Elridge Energy Holdings Bhd (KL:ELRIDGE) said on Wednesday the public portion of its initial public offering (IPO) was oversubscribed by 28.78 times.

Orders from the Malaysian public totalled 2.38 billion shares worth RM690.88 million for 80 million new shares available, Elridge said in a statement. The notices of allotment will be posted to all successful applicants by August 21, it said.

The company received applications for 946.98 million shares, translating into an oversubscription rate of 22.67 times on 40 million shares, it said. The remaining public portion was oversubscribed by 34.88 times based on demand for 1.44 billion shares for 40 million shares available.

The 20 million shares set aside for eligible persons were also fully subscribed.

A private placement of 350 million shares made available to selected investors and 250 million shares to Bumiputera investors were also fully taken up.

Listing has been scheduled for August 22.

The IPO, priced at 29 sen per share, involves a public issue of 350 million new shares and an offer-for-sale of 350 million existing shares, according to its prospectus. Upon listing, Elridge is expected to have a market capitalisation of RM580 million.

The public issue, which will gross about RM101.5 million, comprises 80 million shares for the public, 20 million shares for eligible persons and 250 million shares through private placement to select investors.

Elridge, partly backed by listed electrical distribution equipment firm Mikro MSC Bhd (KL:MIKROMB), mainly manufactures and trades biomass fuel products, particularly palm kernel shell and wood pellets, used to generate heat or electricity.

Biomass products are typically a by-product or waste from renewable sources, such as plants or organic waste.

More than two-thirds of the proceeds raised from the public issue have been set aside for capital expenditure to expand its production capacity, to cater for orders from other new and existing customers.

The company plans to spend 46% of the proceeds for the construction of a new factory and warehouse in Kuantan, which will raise production capacity by 240,000 tonnes. The company has also earmarked 21% of the proceeds to buy equipment for new factories in Kuantan, as well as in Johor and Sabah.

The company currently operates out of a Port Klang factory, which has a capacity of 720,000 tonnes per year, but has hit utilisation rate of nearly 74% by end-2023, it noted.

The rest of the proceeds from the IPO will be used as working capital and to defray listing expenses.

Proceeds from the sale of existing shares, totalling RM101.50 million, would go entirely to the selling shareholders, including chief executive Yeo Hock Cheong and a group of foreign investors.

KAF Investment Bank Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO.