Nestcon Berhad Enters Into An Underwriting Agreement With M&A Securities

Building and infrastructure construction services provider, Nestcon Berhad, has entered into an underwriting agreement with M&A Securities Sdn. Bhd. (“M&A Securities”) in conjunction with its upcoming initial public offering (“IPO”) on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”).

Nestcon’s IPO exercise entails a public issue of 161.0 million new shares and an offer for sale of 32.2 million existing shares by way of private placement. Under the agreement, M&A Securities will underwrite 64.4 million of the 161.0 million new shares, comprising portions to be made available for the Malaysian public as well as eligible directors, employees, and persons who have contributed to the success of the Group (“Pink Form Allocations”).

Of the total 161.0 million new shares, which represents approximately 25.0% of the Group’s enlarged total number of shares, 32.2 million will be allocated to the Malaysian public via balloting, 32.2 million shares under the Pink Form Allocations, 16.1 million shares will be offered via private placement to selected investors while the remaining 80.5 million new shares will be placed out to Bumiputera investors approved by the Ministry of International Trade and Industry. 

Nestcon is a well-established construction services provider specialising in building as well as civil engineering and infrastructure works in Malaysia. Under the building segment, the Group offers a broad spectrum of expertise including the construction of residential, commercial, industrial, and leisure properties. As for the civil engineering and infrastructure segment, the Group has exposure to earthworks, bridges, roadworks, and drainage works.

Group Managing Director of Nestcon, Dr. Lim Jee Gin said, “With the signing of this underwriting agreement, we officially begin the last mile of our journey in becoming a public listed entity. We are thrilled, to say the least, as this IPO exercise brings not only capital funding but also other indirect benefits such as an enhanced brand presence as well as the flexibility to tap into the capital market in the future.”

“While 2020 has been a tremendously challenging year for the construction industry, we believe the worst has passed. For 2021, according to the Department of Statistics Malaysia and Protégé Associates, the construction industry in Malaysia is forecasted to grow by 7.0% year-on-year. So far, we have witnessed an improvement in terms of job flows and we believe this trend will continue throughout the year underpinned by the recovery of the general economy following the roll-out of the vaccination program.”

“We believe it is an opportune time for us to strengthen our position, operationally and financially, to ride on the upward trajectory of the industry. One of our strategies is to embrace mass production principles via the adoption of an Industrialised Building System or IBS. With a part of the IPO proceeds, we plan to establish our own on-site IBS facility that will expedite project delivery time and reduce reliance on foreign workers while simultaneously improve the quality of work.”

“Besides that, we are also eyeing larger civil engineering and infrastructure projects such as highways, transportation infrastructure, various renewable energy projects, and so forth. To do so, we intend to strengthen our machineries and equipment count as well as readying a sizeable sum of working capital as performance bonds in anticipation for these large-scale projects,” Datuk Ir. Dr. Lim concluded.

Nestcon is scheduled to be listed on the ACE Market of Bursa Securities by June 2021, with M&A Securities as the Adviser, Sponsor, Underwriter, and Placement Agent for the IPO exercise.

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