MN Holdings Bhd (MNHB) intends to raise RM17.2mil through its listing on the ACE Market of Bursa Malaysia for business expansion.

       According to MNHB, its operational resources depend largely on the availability of its machinery and equipment.

       The underground utilities and substation engineering specialist plans to use RM5.84mil, or 34%, of the proceeds raised from the initial public offering (IPO) to purchase various machinery and equipment over the next two years to support its business expansion.

       In an interview, executive director of MNHB Datuk Clement Toh said the listing would elevate the company to a bigger platform, and the acquisition of machinery will allow the company to take up larger projects.

       The company said RM4.33mil, or 25.2%, of the proceeds, will be used for general working capital to support new and existing projects.

       Managing director of MNHB Loy Siong Hay said the company’s working capital requirements are expected to increase in line with the growth in its business operations.

       The remainder of the proceeds will be used for the repayment of bank borrowings and estimated listing expenses amounting to RM4mil and RM3mil, 23.3% and 17.5% of the proceeds, respectively.

       Speaking of the company’s strength, Loy said the synergy between both its subsidiaries, MN Power Transmission Sdn Bhd and Mutu Nusantara Sdn Bhd, would allow the company to give a one-stop complete solution for its customers.

       The company had an order book of RM172.2mil as at March 9, 2022 which is believed to be enough to keep it busy for the next two years, according to Toh. The total order book consists of RM135.4mil from the underground utilities engineering segment and RM36.8mil from the substation engineering segment.

       “MNHB is the exclusive partner to Rentak Segar Sdn Bhd and Impiana Mahir Sdn Bhd for underground utilities engineering services and solutions projects,” it said. “Rentak Segar and Impiana Mahir are Tenaga Nasional Bhd-approved main contractors,” it added.

       As at March 9, MNHB had completed 375 contracts, with a cumulative value of RM261mil. It has 174 ongoing projects that have a contract value of RM258mil, of which RM126mil is unbilled.

       Furthermore, the company believes the outlook for the power infrastructure utilities market in Malaysia is bright.

       Based on a projection by the United Nations department of economic and social affairs, Malaysia’s population will increase within three decades. Along with urbanisation, this will benefit the power industry.

       Based on the capital expenditure (capex) incurred for recurring electricity generation, transmission and distribution, there is a steady growth in the power utilities infrastructure market in Malaysia.

       That industry is said to have a compounded annual growth rate (CAGR) of 12.4%. Capex rose from RM5.7bil in 2016 to RM10.3bil in Malaysia in 2021.

       For Peninsular Malaysia and Sabah, the CAGR for recurring electricity generation, transmission and distribution is 6.1%, with capex rising from RM5.4bil in 2016 to RM7.3bil in 2021.

       MNHB secured a revenue of RM115.2mil for the provision of underground utilities engineering services and solutions, as well as substation engineering services and solutions in its financial year 2021.

       The company, based on those businesses, has a market share of 1.1% for the capex incurred in Malaysia.

       That market share for MNHB rose to 1.6% for the Peninsular Malaysia and Sabah markets.

       Between 2022 and 2024, an estimated RM20bil will be allocated as capex for recurring electricity generation, transmission and distribution in Peninsular Malaysia and Sabah. From the RM20bil allocation, about RM11.8bil will be set aside for capex in 2022.

       MNHB sees this as a market opportunity, according to executive director of MNHB Dang Siong Diang.

       Under the listing exercise, MNHB is issuing 81.75 million new shares at an issue price of 21 sen per share, representing 20% of its enlarged share capital of 408.75 million.

       Of the 81.75 million new shares, 20.44 million shares will be made available to the Malaysian public, 8.18 million shares for its eligible directors and employees, 51.09 million shares reserved for a private placement to bumiputra investors and 2.04 million shares will be placed to selected investors.

       M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.

       Meanwhile, there will also be an offer of sale for 40.88 million shares to selected investors by way of private placement. Based on the enlarged share capital, MNHB is expected to have a market capitalisation of RM85.84mil.

       The IPO is open for subscription from April 8 until April 15. The company’s listing on the ACE Market is tentatively scheduled for April 28, 2022.