Critical Holdings Bhd aims to step up its expansion drive following a strong market debut on Monday, tapping a surge in demand for data centres and semiconductor facilities.
The Penang-based engineering firm specialising in design and instalment of building systems company is raising 39 million ringgit ($8.4 million) in its public listing as shares opened at 0.5 ringgit, up 53% from the initial offering price of 0.35 ringgit in Kuala Lumpur on Bursa Malaysia’s Ace Market, a bourse for small and midsize firms with high growth potential before they get listed on the main market.
The stock price continued to move higher after more than 30 minutes of trading, reaching 0.56 ringgit, or 60% above the IPO price.
At 10.57, the stock price rose 18.5 sen to 53.5 sen.
The public portion of Critical Holdings’ shares had been oversubscribed by 88 times, among the highest for the country’s initial public offerings this year.
The strong market debut highlights investor confidence in the young company’s growing business, which is benefiting from construction of new tech infrastructure like data centers and chip factories in Malaysia.
Founded in 2011, Critical Holdings provides so-called mechanical, electrical and process utilities (MEP) services — the more interior side of plant construction — which include designs and installment of power, water supply and cooling systems among others.
In particular, the company is focused on facilities like data centers and plant rooms for semiconductor and pharmaceutical companies, where stable electrical and water supply are essential. Revenue from plant rooms currently take up 68% of its top line, as of the latest financial year, while engineering for cleanrooms and data centers account for just 22% and 9%, respectively.
Critical Holdings’ CEO Tan Si Lim said the company will use the proceeds to cater to projects at bigger scale and diversify its client base. The company plans to set up a new regional office in central Malaysia to expand its outreach near the capital and southern regions like Johor, where data center companies are rushing to build new data centers.
“More hyperscale collocation data centers are coming into Malaysia,” Tan told Nikkei Asia in a recent interview in the northern Malaysian city of Penang, referring to large facilities for those often associated with big tech companies like Amazon Web Services, Microsoft and Google.
Malaysia is expected to gain increased traction for data center investments owing to a constraint on new supply in neighboring Singapore, due to environmental concern and land shortage. The Malaysian government is targeting its data center industry to achieve a revenue of close to $800 million by 2025, doubling from the current level.
“We already have design capabilities and installation experience for data centers, so we want to make use of our expertise,” Tan said.
Tan added another tailwind is from the semiconductor industry in Penang, where global chip companies are investing more to expand their production capacity and diversify their supply chains amid U.S.-China tensions. He called that “the next bucket that we hope to grab and benefit from.”
For the financial year ended June, the company posted revenue of 150 million ringgit and a net income of 9.59 million ringgit, exhibiting a compound annual growth rate of over 50%, respectively, since financial year 2020.
