Pentamaster’s PIL valued at RM321mil

Proposed IPO in Hong Kong involves sale of 23% stake in the unit

PETALING JAYA: Pentamaster Corp Bhd is planning to list its most profitable subsidiary, valued at RM321mil, on the main board of the Hong Kong Stock Exchange to raise funds for the expansion of its smart home applications and Internet of things (IoT) business.

The proposed initial public offering (IPO) involves the sale of a 23% stake in Pentamaster International Ltd (PIL) to investors at a price to be determined at a later date, the company said in a filing with Bursa Malaysia. Pentamaster owns 92.6% of PIL.

The share sale will reduce its stake in the unit, which generated all its profits in the financial year ended Dec 31, 2016, to 63%.

Pentamaster will be required to seek its shareholders’ approval in a general meeting for the proposed dilution.

The IPO exercise is expected to be completed in the first quarter of next year.

“The proposed listing will provide the company and its automated solutions business with a diverse fund-raising platform in the future, which, in turn, will increase its financing flexibility to fund its future growth,” Pentamaster said in the statement yesterday.

The company said the offer price for PIL would be determined at a later date.

Pentamaster had announced the plan to spin off its unit in June this year. The planned fund-raising scheme had helped propel the stock 250% higher this year at yesterday’s close of RM4.73.

At this level, the company has a market capitalisation of RM693mil.

The valuation for PIL was ascribed by McMillan Woods Partners in Singapore.

McMillan Woods was appointed as the independent valuer to provide its valuation on the fair market value of the PIL Group to the board.

Pentamaster said it intended to use the proceeds from the share sale exercise to pay for future expansion of the group’s smart building solutions or building management system, and/or property development projects applying such solutions and system, as well as the IoT solutions with applications covering digital mobile software, payment gateway, secured software and/or building construction applications and solutions.

In addition, the fund will be utilised for technology-related investments in business applications covering healthcare, bioscience, aviation, information and communications technology, finance, social environment, energy and infrastructure.

The proceeds will also be allocated for working capital to carry out the new initiatives, including research and development, the hiring of employees, marketing and administrative expenses.

Meanwhile, the net proceeds to be raised by PIL from the public issue of new shares are proposed to be utilised for capital investment and costs in relation to the construction of a new production plant in Batu Kawan Industrial Park, Penang, and the expansion of its existing production plant in Bayan Lepas, Penang.

The net proceeds will also be used for working capital, business expansion into the Greater China region (comprising China, Hong Kong, Macau and Taiwan), the establishment of an office in California in the United States, as well as for marketing, branding and promotional activities.

The details of the proposed listing, including the size and structure of the proposed share offer, the offer price and the amount of proceeds to be raised, will be determined at a later date upon approval being obtained from the Hong Kong Stock Exchange, closer to the launch of the prospectus of PIL and after taking into account the prevailing equity market and industry conditions in which the PIL Group is operating.

Pentamaster, which closed 0.4% higher at RM4.73, traded on a volume of 405,000 shares.