Established Singapore civil engineering firm Huationg Global is raising about $4.1 million in a public listing to bolster its capacity to take on major construction projects here.
The firm yesterday launched an initial public offering (IPO), comprising a placement of up to 27.5 million shares at 20 cents apiece, for a listing on the Singapore Exchange's Catalist board.
The cash injection will be used to fund acquisitions, given that the group expects a bright outlook underpinned by robust construction demand in the coming years.
Founded in 1983 as Sin Choon Contractor, Huationg Global has grown into a firm with nearly 900 workers and 149 tipper trucks. It focuses mainly on public projects offered by the Housing Board and the Land Transport Authority, among others.
The firm believes strong construction demand will boost sales of construction materials supplied by Huationg Global, such as liquefied soil stabiliser (LSS), a self-compacting material used as backfill.
The firm intends to produce more LSS using the net proceeds, chief executive Patrick Ng said yesterday when announcing the IPO.
He is hopeful the IPO will help strengthen Huationg's market position.
"Projects in Singapore are quite huge. Once we're listed, we'll also have more opportunities to work with international contractors on a joint-venture basis to take on larger projects," he said.
Mr Ng expects a sustained pipeline of major public infrastructure and housing projects, citing a forecast by the Building and Construction Authority (BCA) that the average value of construction demand will be between $25 billion and $34 billion annually for next year and 2016.
To better tap those opportunities, Huationg Global will also focus on obtaining a BCA A1 rating within the next 12 months to remove any limit on the projects it can bid.
Its current A2 rating allows the company to undertake only public projects of up to $90 million.
"We're already a major player in underground works - we hope to reinforce that.
"Using the IPO proceeds, we want to also develop more LSS for the Thomson Line MRT project with 23 stations," he added.
LSS can be used for post-excavation refilling and reclamation works. Mr Ng said the company is also involved in talks about the possible use of LSS in the Singapore-Johor Baru rapid transport system construction.
The company has recorded an annual compound growth rate of 15.7 per cent in revenue since financial year 2011. Revenue was $108.5 million in 2013 and $67.6 million in the first half of this financial year.
Its civil engineering order book stands at $114.3 million, to be recognised in the next one to three years, and the company is involved in 15 major ongoing projects. These include the construction of Loyang bus depot and the Tuas West MRT line extension works.
The IPO closes at noon on Friday. Trading is due to start on Dec 9.
This article was first published on December 2, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.