TCS Group to raise RM 20.7 million from IPO to fund expansion plans

Building and infrastructure construction services provider, TCS Group Holdings Berhad has launched its prospectus today in conjunction with the Group’s upcoming listing on the ACE Market of Bursa Malaysia Securities Berhad.

Managing Director of TCS Group,  Tee Chai Seng said, “We are confident the listing exercise will allow us to further strengthen our foothold in the construction industry as it enables us to gain access into the capital markets to fuel our expansion plans. In addition, we will also broaden our revenue stream by venturing into infrastructure construction services to include major roads, highways and bridges. The proceeds from the Initial Public Offering (“IPO”) will certainly help accelerate in bringing these plans to fruition”

“The progressive reopening of our economy from May 2020 following the Movement Control Order has led to resumption of construction activities. Initiatives by the Government such as, amongst others, the reintroduction of Home Ownership Campaign (“HOC”), removal of 70% margin financing limit applicable for 3rd housing loan onwards for properties valued at RM600,000 and above, and stamp duty exemptions, coupled with the low interest rates environment are expected to invigorate the property sector.”

TCS Group provides construction services for buildings, infrastructure, civil and structural works in Malaysia. Under building construction, the Group has completed various types of residential and commercial buildings. The Group is also capable of constructing purpose-built buildings, such as the GEMS International School in Selangor.

Majority of TCS Group’s projects are located in Klang Valley (Selangor and Wilayah Persekutuan) and Negeri Sembilan. The Group’s customers include property developers such as SP Setia Berhad, IJM Corporation Berhad, United Malayan Land Berhad, Tropicana Corporation Berhad and Worldwide Holdings Berhad.

In terms of financial performance, the Group’s revenue increased from RM103.6 million in the financial year ended Dec 31, 2016 (“FY2016”) to RM358.4 million in FY2019, representing a three-year compounded annual growth rate (“3-year CAGR”) of 51.2 percent. Profit after tax (“PAT”) meanwhile, increased from RM5.1 million in FY2016 to RM15.7 million in FY2019, growing at a 3-year CAGR of 45.4%.

TCS Group will be raising approximately RM20.7 million from the IPO’s public issue, of which RM13.0 million or 62.8 percent of total proceeds is earmarked for the purchase of new construction machinery and equipment within 36 months from listing; RM4.2 million or 20.3 percent for working capital for construction projects within 24 months from listing; and the balance RM3.5 million or 16.9 percent to defray the listing expenses within 3 months from listing.

The Group’s IPO exercise entails a public issue of 90.0 million new shares representing 25.0 percent of the Group’s enlarged total number of shares, as well as an offer for sale of up to 18.0 million shares.

The allocations of the 90 million new shares include up to 10.8 million shares for the Malaysian public via balloting (with at least 5.4 million set aside for Bumiputera investors); up to 7.2 million shares for eligible directors, employees and persons who have contributed to the success of the Group; up to 32.4 million shares for institutional and selected investors by way of private placement; while the  remaining 39.6 million shares to be placed out to identified Bumiputera investors approved by the Ministry of International Trade and Industry.

Pursuant to the launch of TCS Group’s prospectus, applications for the public issue are open from today and will close on July 10 at 5.00p.m. Tentatively, the Group is scheduled to be listed on the ACE Market of Bursa Securities on July 23.

Upon listing on the ACE Market, TCS Group will have a market capitalisation of RM82.8 million based on the issue price of RM0.23 and its enlarged total number of issued shares of 360.0 million shares. RHB Investment Bank is the Sole Principal Adviser, Sponsor, Sole Underwriter and Sole Placement Agent for the IPO exercise.


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