KUALA LUMPUR: Oil palm plantation player MKH Oil Palm (East Kalimantan) Bhd (MOP) signed an underwriting agreement with M&A Securities Sdn Bhd and Kenanga Investment Bank Bhd for its upcoming initial public offering (IPO) on the main market of Bursa Malaysia.
Under the IPO, MOP will issue 220.0 million new ordinary shares, constituting 21.5 per cent of the company’s share capital of 1.02 billion.
Additionally, 30.7 million existing shares, equivalent to 3.0 per cent of the enlarged share capital, will be offered for sale to selected investors through private placement.
Among the 220.0 million new shares, 51.2 million new shares, or 5.0 per cent of the enlarged share capital, will be available for application by the Malaysian public through balloting.
Out of these, 25.6 million shares or 2.5 per cent of the enlarged share capital, will be offered to the general public, with an equivalent amount reserved for Bumiputera public investors.
Furthermore, 168.8 million new shares, representing 16.5 per cent of the enlarged share capital, will be allocated to chosen investors via private placement.
MOP non-independent non-executive chairman Tan Sri Chen Kooi Chiew said this underwriting agreement marked a significant step towards listing the company on the main market of Bursa Malaysia.
“With access to the broader equity market, MOP will have the necessary resources and flexibility to capitalise on the attractive opportunities ahead.
“In line with our growth strategy, funds raised from the IPO will be used to expand our plantation landbank by acquiring land close to our existing plantation estates.
“Additionally, we will also focus on enhancing our operational efficiency and increasing our processing capabilities and product offerings with new machinery and equipment,” Chen said in a statement.
Under the underwriting agreement, M&A Securities and Kenanga Investment Bank will jointly underwrite 51.2 million new shares made available to the Malaysian public.
MOP, an upstream oil palm plantation company, is engaged in oil palm cultivation, including the production and sales of crude palm oil (CPO) and palm kernel (PK).
The company owns two oil palm plantation estates with a total area of 18,205 hectares, one palm oil mill and one jetty, all located in East Kalimantan, Indonesia.
Within the plantations, most oil palms are in the prime mature stage, representing peak production years between the ages of 10 and 16.
Situated along the equator, the plantations benefit from adequate rainfall and sunshine, creating an optimal climate for oil palm cultivation.
The plantation’s operation is further supported by a palm oil mill and a jetty, easing logistics management.
The plantation estates are strategically located in a prime area, close to the provincial capital of East Kalimantan, Samarinda, the financial centre of Kalimantan, Balikpapan and Indonesia’s new capital, Nusantara.
“Overall, we are upbeat on our prospects, as the increase in global population is a crucial driver for rising demand for edible oils and fats globally.
“We are well-positioned to benefit from the expanding global edible oils market and the rise in CPO consumption in Indonesia.
“Moreover, MOP is set to gain from the economic transformation of East Kalimantan, spurred by the development of Nusantara, Indonesia’s new capital city,” Chen said.
MOP will be listed in April with M&A Securities as the adviser, managing underwriter, joint underwriter and joint placement agent of the IPO exercise. Kenanga Investment Bank is the joint underwriter and joint placement agent.
Upon completion of the IPO, MOP will be a 63.07 per cent subsidiary of MKH Bhd, from 100 per cent currently.
