Aurelius Technologies Berhad: What to Expect from the IPO

 

Background of Aurelius Technologies

Well dated in the IPO prospectus on the SC's official website, Aurelius Technologies is an investment holding company that provides industrial electrical products through out it whole subsidiary, BCM Electronics.

Till this date, Aurelius Technologies provides electronic manufacturing skills for three product categories: 

1. Communications and IoT Products
2. Electronic Equipment
3. Semiconductor components

With these three categories, the Aurelius Technologies business of communications along with IoT products account for almost 90% of  the  Aurelius Technologies FYE2021 revenue.

 Aurelius Technologies Main HQ's are located in Malaysia and also provides services to companies in Asia, North America, Europe, with Malaysia, Singapore and USA contributed to atleast 90 percent of Aurelius Technologies revenue in the past years. 

Aurelius Technologies IPO Details

The following details are derived from information about Aurelius Technology, as disclosed by Malaysia's Ministry of International Trade and Industry (MITI).

• IPO Price per Share: RM1.36 (to be confirmed)  
• IPO Application Opening Date: November 29, 2021  
• IPO Application Deadline: December 3, 2021  
• Announcement of Draw Results: Early December 2021  
• Expected IPO Listing Date: December 16, 2021  
• Aurelius Listed Market: Main Market  

After completing the fundraising and share transfer through the IPO, Aurelius Technology has approximately 358.18 million shares of enlarged share capital. 

This total includes the issuance of 77.01 million new shares, which represents 21.50% of the enlarged share capital, as well as the sale of 26.86 million shares by shareholders, accounting for 7.50% of the enlarged share capital.

In its initial public offering (IPO), ATech issued a total of 103.87 million shares, which accounts for 29.00% of the enlarged share capital. 

Out of this, 22,099,000 shares were allocated to the Retail Offering, representing 6.40% of the enlarged share capital, while the remaining 80,961,000 shares were designated for the Institutional Offering, making up 22.60% of the enlarged share capital.

• 17.9 million shares for the Malaysian public to subscribe ,
• 5 million shares reserved for qualified directors, employees and business partners,
• Private placement of 44.7725 million shares to selected investors, and
• 36,188,500 MITI designated Bumiputera investors.

As the IPO price of Aurelius Technology has yet to be disclosed, the market value and price-earnings ratio of ATech remain uncertain at the time of listing.

The shareholding structure of Aurelius Technology post-listing is as follows:

- Aurelius Holdings: 71%  

- Directors: 0.28%  

- The Public: 28.72%  

In the shareholding structure of Aurelius Technology Berhad's largest shareholder, Aurelius Holdings, three key major shareholders are identified:

• MSL, Main Stream Limited (associated with LCY and LHC)  
• LCY, Lee Chong Yeow, Executive Director and CEO  
• LHC, Loh Hock Chiang, Executive Director and CFO  

Aurelius Holdings plans to conduct an equity allocation six months after the listing of Aurelius Technology. MSL, Pixels Advisors, and Titanium will receive their respective equity quotas and subsequently exit Aurelius Holdings, which will retain shares amounting to 71% of Aurelius Holdings.

After distributing proportional shares to other shareholders, Aurelius Holdings will maintain a 22.05% stake to continue its operations as a holding company. 

Following this distribution, LCY and LHC will each hold 50% of the equity in Aurelius Holdings.

Once the equity distribution to LCY and LHC is deducted, each will hold 8.5% of ATech's equity. Additionally, they will receive 0.03% of the equity as directors, resulting in LCY and LHC directly owning 8.53% of ATech's equity each.

Utilization of IPO Proceeds by Aurelius Technology  

Aurelius Technology plans to allocate the funds raised from the IPO for several purposes, including purchasing new machinery and equipment, repay bank debt, using it as working capital, and paying listing fees etc. 

However, the specific percentages for each project are not disclosed in the draft of the IPO prospectus.  

The company aims to expand its operations into Semiconductor Component Manufacturing through this capital raising. Aurelius Technology is also exploring the possibility of increasing its current two production lines for Customer F's semiconductor component manufacturing to seven production lines by the end of 2023 to meet the growing demands of Customer F.  

Introduction of Customer F: Customer F operates in the wireless communication sector, focusing on the design, production, research and development, and sales services of wireless communication modules and solutions in the Internet of Things domain. The company is incorporated in China and is publicly listed on the Shanghai Stock Exchange, with its headquarters situated in China.  

According to the information provided by Aurelius Technology, the listed company in China that meets the criteria is Quectel Wireless, officially known as Quectel Communication Technology Co., Ltd., with the stock code SHA: 603236.  

Additionally, ATech intends to introduce a new product focused on the manufacturing of lithium-ion battery pack systems for light vehicles. According to its IPO prospectus, ATech is currently collaborating with third parties during the development phase of this battery pack system.  

To enhance its EMS business and facilitate the development of lithium-ion battery pack systems for light vehicles, ATech plans to construct a new factory to scale up its production capabilities.  

Construction of the new manufacturing facility has already commenced on approximately 3 acres of land adjacent to the existing facility. 

This new single-story building will encompass an area of 61,909 square feet.  

Simultaneously, ATech has acquired new machinery and equipment, including the purchase of two production lines and an investment in four additional production lines to further enhance its production capabilities. 

These new assets will cater to the expanding needs of Aurelius Technology's EMS business.  

Dividend Policy- Aurelius Technology  

As ATech operates as a holding company, its income and capacity to distribute dividends are contingent upon the dividends received from its subsidiary, BCM Electronics. 

The distribution of dividends from ATech's subsidiary will be influenced by various factors, including its operating performance, earnings, capital requirements, overall financial condition, and other pertinent considerations.  

The board of directors of ATech has set a target payout ratio of 20% of the Profit After Tax attributable to the owners of the company for each financial year on a consolidated basis. 

This is after accounting for working capital requirements and is subject to applicable laws and contractual obligations. 

The board also ensures that such distributions do not adversely affect ATech Group's cash needs or any approved plans.

Conclusion  

The information provided above offers a fundamental overview of Aurelius Holdings Berhad ("ATech"). 

The upcoming months of November and December are expected to bring numerous IPOs and new listings, including furniture manufacturer Ecomate, logistics companies MTT Shipping & Logistics and Swift Haulage Berhad, as well as Malaysia's domestic electrical retailer SenHeng New Retail Berhad, which specializes in emerging electrical appliances.  

And also, Aurelius is poised to be the second tech IPO of 2021, following Ramssol Group Berhad, assuming no other IPOs, particularly the UWC-related IPO of Coraza Integrated Technology Berhad, are introduced in the meantime.