F-1/A: Founder Group Limited Eyes Nasdaq Listing with $7.3 Million IPO

Founder Group Limited, a Malaysian solar EPCC solutions provider, is seeking to raise capital through an initial public offering on the Nasdaq Capital Market, offering 1,625,000 ordinary shares at an estimated price range of $4.00 to $5.00 per share.

Summary

• Founder Group Limited, a British Virgin Islands company with primary operations in Malaysia, is planning an initial public offering (IPO) on the Nasdaq Capital Market.
• The company aims to offer 1,625,000 ordinary shares, with an expected initial public offering price between $4.00 and $5.00 per share.
• The IPO is expected to generate gross proceeds of approximately $7.3 million if the underwriters do not exercise their over-allotment option, and $8.4 million if the underwriters exercise their over-allotment option in full.
• The company intends to use the net proceeds for expansion into Southeast Asia, business expansion into hydropower and biogas, general working capital, and potential mergers and acquisitions.
• US Tiger Securities, Inc. is acting as the sole book-running manager for the offering.
• Following the IPO, share ownership will remain concentrated, with Reservoir Link Energy Bhd. and Lee Seng Chi expected to collectively own approximately 74.06% of the outstanding ordinary shares if the underwriters do not exercise their over-allotment option.
• The company's revenue for the fiscal year ended December 31, 2023, was RM148.05 million (approximately US$32.25 million), representing a 133% increase compared to the previous year.
• Net income for the same period was RM7.15 million (approximately US$1.56 million), an 81% increase year-over-year.
• The company faces risks including a limited operating history, reliance on securing large-scale solar projects, and concentration of revenue from a few large clients.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook, highlighting strong growth and expansion plans. However, it also acknowledges several risks and challenges, preventing a higher sentiment score.

Positives

• The company has experienced significant revenue and net income growth in recent years.
• The company is expanding into other countries in Southeast Asia.
• The company is diversifying its services to include hydropower and biogas projects.
• The company has a dedicated design and engineering team.
• The company has an experienced management team.

Negatives

• The company has a limited operating history.
• The company's business is project-based, creating revenue uncertainty.
• The company faces risks associated with revenue concentration from a few large clients.
• The company is exposed to risks related to concentration of suppliers.
• The company is geographically concentrated in Malaysia.

Risks

• The company's limited operating history makes it difficult to forecast future results.
• The company may not be able to continuously secure large-scale solar projects.
• The company depends on subcontractors to perform part of its services.
• The company faces risks associated with revenue concentration from a few large clients.
• The company is exposed to risks related to concentration of suppliers.
• The company's business and financial performance are affected by project execution.
• The company depends on the retention and procurement of certain approvals, registrations, permits and licenses.
• The company's business is subject to inherent risks in the solar energy industry.
• The company may be unsuccessful in expanding and operating its business internationally.
• The COVID-19 pandemic could continue to affect the global economy and the markets in which the company operates.
• After the completion of this offering, share ownership will remain concentrated in the hands of the largest shareholder Reservoir Link Energy Bhd. and management, who will continue to be able to exercise a direct or indirect controlling influence on us.
• Certain recent initial public offerings of companies with public floats comparable to our anticipated public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our Ordinary Shares.
• If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our Ordinary Shares may be materially and adversely affected.

Future Outlook

The company intends to expand its business in Southeast Asia and offer EPCC services for other types of renewable energy, such as hydropower and biogas.

Industry Context

The document highlights the growing global and ASEAN solar energy market, driven by increasing cost competitiveness, improving technology, and government support. Malaysia is targeting 31% renewable energy share by 2025.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it mentions the competitive landscape of the solar energy industry in Malaysia, with many new companies joining the competition.
• The document mentions Reservoir Link Energy Bhd., a Malaysian public-listed oil & gas (O&G) and renewable energy company, as a major shareholder.

Related Party Transactions

• The company has engaged in transactions with related parties, including Solar Bina Engineering Sdn. Bhd., Reservoir Link Energy Bhd., and Lee Seng Chi.
• These transactions include sales of renewable energy products and services, recharge of expenses, interest charged for advances, and management fees.

Stakeholder Impact

• Shareholders: Potential for capital appreciation and dividends in the future, but also risk of share price volatility.
• Employees: Potential for job growth and career advancement as the company expands.
• Customers: Access to innovative solar installation services and eco-friendly resources.
• Suppliers: Opportunities for increased business as the company grows.
• Creditors: Potential for increased creditworthiness as the company's financial performance improves.

Next Steps

• The company needs to secure final approval for listing on the Nasdaq Capital Market.
• The company needs to execute its expansion plans in Southeast Asia.
• The company needs to diversify its services to include hydropower and biogas projects.

Key Dates

Keywords

solar, EPCC, IPO, renewable energy, Nasdaq, Malaysia, Founder Group Limited, ordinary shares, initial public offering, energy